Key Takeaways
- JPMorgan advises investors with 3-12 month time frames to add exposure during market declines
- Strategist Mislav Matejka cautions against embracing overly pessimistic outlooks amid geopolitical uncertainty
- Earnings per share projections for the S&P 500 are trending upward
- The firm favors international equities, emerging markets, small-cap stocks, and value plays
- JPMorgan highlights key differences between 2026 and 2022 regarding inflation dynamics and employment trends
Wall Street giant JPMorgan issued a strategic memo on Monday encouraging investors to view any fresh market selloffs as opportunities to increase positions. The financial institution maintains that the framework for another sharp rebound is already established.
Mislav Matejka, JPMorgan’s head of European strategy, authored the research piece. He emphasized that investors operating with a three-to-twelve-month investment window should be accumulating risk during downturns rather than retreating from equity markets.
Matejka addressed current geopolitical uncertainties, including tensions surrounding the Strait of Hormuz and continuing Iran-related conflicts. While acknowledging that military confrontations generate market volatility, he contended that the danger of being caught off-guard by maintaining a pessimistic stance is substantially elevated.
JPMorgan observed that pessimistic sentiment had become the prevailing market view approximately two to three weeks after the conflict escalation. Oil prices were anticipated to surge significantly, and market participants had substantially decreased their equity allocations.
The firm indicated that this configuration, paired with technical indicators showing oversold conditions, represented the ideal moment to begin accumulating positions. JPMorgan initially issued this recommendation on March 23.
Key Distinctions Between 2026 and 2022
Matejka outlined multiple factors that differentiate the present landscape from 2022. Inflationary forces are more subdued, companies possess diminished pricing power, and compensation growth is being constrained partly through artificial intelligence integration.
Real interest rates and employment market dynamics also contrast sharply with the 2022 period, when pandemic-related disruptions intensified inflation control challenges. Given these circumstances, JPMorgan is advocating for long-duration investments that demonstrate sensitivity to interest rate fluctuations.
The institution believes central banks will overlook an anticipated 1.5 percentage point increase in year-over-year inflation metrics. Matejka stressed that inflation expectations are “unlikely to de-anchor.”
Earnings per share forecasts for the S&P 500 in 2026 have persistently climbed higher. A key US economic gauge, the ISM manufacturing index, is recording its strongest readings in three years. Eurozone earnings per share expansion could hit 18.2% during the current year.
The Citigroup Economic Surprises Index also registers firmly positive readings currently, the research note highlighted.
JPMorgan’s Strategic Investment Recommendations
JPMorgan anticipates international equities and emerging markets will restart their outperformance relative to US stocks. The bank additionally prefers small-capitalization and value-oriented stocks compared to growth names.
Prior to the Iran conflict escalation, international stocks had already delivered 11% outperformance versus US equities. JPMorgan projects this pattern will re-establish momentum during the latter half of 2026 as military tensions subside and the dollar’s defensive appeal diminishes.
Emerging market equity valuations continue trading at a 34% markdown compared to developed market counterparts. MSCI Europe exchanges hands at 14 times projected 2026 earnings, contrasted with 19.5 times for the S&P 500.
Matejka noted that emerging market capital inflows, which paused during the conflict period, are positioned to restart. The bank’s relative performance framework suggests new peak levels in the year’s second half.
