JPMorgan Warns U.S. Stocks Could Fall 10% on Middle East Conflict, Market Not Yet Priced In

BlockBeats News, March 9th, JPMorgan's trading department stated that the Iran war could trigger a potential 10% pullback in the S&P 500 index from its peak, and U.S. stock market traders are not prepared for this.

JPMorgan's Global Market Insights chief Andrew Tyler said on Monday that due to the escalating Middle East conflict with no signs of easing and oil prices surging above $100 per barrel, he has turned tactically bearish on U.S. stocks. In the event of a pullback, this would mean the S&P 500 could fall around 10% from its high to about 6270 points, approximately 7% below last Friday's closing level.

Tyler stated that investors' current positions are not prepared for a downturn, "Current positioning is overall neutral, lacking extreme risk-off positioning." As traders "anticipated the situation to ease," energy stocks experienced net selling last week. However, after several Gulf countries announced production cuts, oil prices surged above $100 per barrel, sparking concerns in the market about the long-term supply shock and stagflation risks.

Tyler believes that if the conflict is short-lived, these risks could quickly fade. "Once a clear path to de-escalation emerges, this tactical call will end as potential macro fundamentals continue to support risk assets."