Key Takeaways
- JPMorgan recommends investors with 3–12 month time frames capitalize on market selloffs
- Head strategist Mislav Matejka cautions against adopting pessimistic outlooks amid geopolitical uncertainty
- Earnings forecasts for the S&P 500 continue climbing upward
- The firm favors international equities, emerging markets, smaller companies, and value-oriented stocks
- Current economic conditions differ significantly from the 2022 inflationary period, according to JPMorgan
In a research briefing released Monday, JPMorgan advised market participants to view any fresh bout of selling pressure as an opportunity to increase positions. The financial institution maintains that all the necessary ingredients for a sharp rebound are currently present.
Mislav Matejka, who oversees European equity strategy at JPMorgan, authored the analysis. He recommended that those investing over a three-to-twelve-month period should be accumulating exposure when markets decline rather than retreating to the sidelines.
Matejka acknowledged current geopolitical challenges, including heightened concerns surrounding the Strait of Hormuz and continuing tensions involving Iran. While he conceded that military situations generate market turbulence, he emphasized that remaining overly cautious carries significant risks of missing subsequent rallies.
JPMorgan observed that pessimistic market sentiment had become widespread roughly two to three weeks after the conflict began. Market participants broadly anticipated oil prices would surge, leading many to dramatically scale back their equity allocations.
According to the firm, this positioning—coupled with technical indicators showing oversold conditions—signaled an ideal entry point. JPMorgan initially issued this recommendation on March 23.
Key Distinctions Between 2026 and 2022
Matejka outlined several critical differences between today’s economic landscape and the situation four years ago. Inflationary forces are considerably more contained, businesses possess diminished ability to raise prices, and compensation increases are being moderated partly through the integration of artificial intelligence technologies.
Interest rate environments and employment dynamics also contrast sharply with 2022, when pandemic-related disruptions complicated inflation management efforts. Given these factors, JPMorgan is advocating for longer-duration investments that exhibit sensitivity to borrowing cost fluctuations.
The institution believes monetary policymakers will largely disregard an anticipated 1.5 percentage point increase in year-over-year inflation readings. Matejka stressed that inflation expectations remain firmly anchored.
Projections for S&P 500 earnings per share in 2026 have maintained their upward trajectory. The ISM manufacturing index, a key gauge of American economic activity, recently posted its strongest readings in three years. Meanwhile, Eurozone per-share earnings growth could potentially hit 18.2% during the current year.
The research note also highlighted that the Citigroup Economic Surprises Index currently reflects strong positive momentum.
JPMorgan’s Preferred Investment Areas
JPMorgan anticipates that international equities and developing market stocks will reclaim their outperformance versus American shares. The bank similarly prefers smaller-capitalization companies and value-oriented investments compared to growth-focused alternatives.
Prior to the Iran-related tensions, international stocks had already delivered returns 11 percentage points above US equities. JPMorgan projects this pattern will reassert itself during the latter portion of 2026 as military conflicts subside and safe-haven demand for dollars diminishes.
Developing market stocks continue trading at a 34% valuation discount relative to developed market counterparts. MSCI Europe currently trades at 14 times projected 2026 earnings, substantially below the S&P 500’s 19.5 times multiple.
Matejka predicted that capital flows into emerging markets, which paused during the conflict period, will resume. The bank’s comparative performance analysis suggests new record highs are achievable in the year’s second half.
