By Jules Rimmer
The correction of 2026 is very different to 2022, JPMorgan strategists tell investors
JPMorgan says investors should keep buying the dip, even with the S&amp;P 500 at a record high.
The war in Iran has been ongoing for two months now, but despite the headline risk the conflict presents, investors should be using any market weakness to buy, say JPMorgan strategists.
The political, economic and military considerations that discourage a prolonged confrontation in the Persian Gulf are still applicable and other more supportive drivers are coming into view, they add.
The dip-buying recommendation, reiterated by JPMorgan's chief global strategist, Mislav Matejka and team of four other analysts in a report published on Monday, is being subtly recalibrated to adjust for a different market leadership as summer approaches.
Matejka's hunch is that unlike 2025, Magnificent Seven stocks may not set the pace in a rebound and the leadership may be more broad-based. Moreover, he and his team predict that international markets VXUS and especially emerging market EEM stocks will outperform the U.S., where on Friday the S&amp;P 500 SPX closed at a record high for the ninth time this year.
Using the conflict-driven weakness to add has been the right call, say JPMorgan strategists
The argument is that equity markets in 2026 are set to react very differently as they recover from the shock of the Iran crisis, than they did from the Liberation Day sell-off of 2025 or the major drawdown of 2022 after Russia invaded Ukraine.
The big difference is the earnings momentum the S&amp;P 500 is now developing, as well as the inflation picture and the approach of central banks towards that backdrop.
Matejka highlights that in 2022, for example, inflation was being forced upward by post-pandemic wage growth running at 6% whereas now it's more like 4% and &#34;trending lower.&#34; Central banks in 2022 were behind the curve, mistakenly interpreting the pick-up in inflation as &#34;transitory&#34; and then being obliged to hike aggressively when it became clear it was more threatening than that.
This time round, Matejka asserts that central banks are unlikely to hike rates into a geopolitically-driven energy supply shock, forcing oil (BRN00) prices higher, that would be growth bearish. The hawkish tack that interest rate futures took when hostilities kicked off is likely to be unwound and repriced lower.
The rate outlook is very different in 2026 compared to 2022
Given Matejka's positive view then, what's the right exposure for investors looking to participate in the expected rebound?
In March, the JPM strategy had favored the megacap tech MAGS stocks that had fallen to a ten-year low in terms of relative valuation versus the benchmark. Noting that world equities UK:MXWO have already enjoyed a pronounced V-shaped recovery, Matejka thinks the &#34;overall market leadership will broaden,&#34; allowing value and small-cap stocks to flourish. Matejka persists with his overweight call on semiconductors SOX, despite the sector's massive 50% spike over the last month.
Last year, after the market troughed in April, earnings prospects for international stocks were hindered by concerns about tariffs while earnings growth in China MCHI and Europe XX:SXXP was notable by its absence. Matejka sees things differently this year, though, and spots &#34;green shoots&#34; for the Chinese economy, which also could boost European-listed miners.
-Jules Rimmer
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(END) Dow Jones Newswires
04-27-26 0441ET

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JPMorgan advises investors to continue buying the dip despite the S&P 500 reaching record highs. Strategists believe that the ongoing conflict in Iran presents a buying opportunity, as market reactions in 2026 will differ from previous years due to improving earnings momentum and a more favorable inflation outlook. They predict broader market leadership, with emerging markets potentially outperforming the U.S. Additionally, they maintain a positive stance on semiconductors and see potential growth in the Chinese economy, which could benefit European miners.

- JPMorgan strategists recommend that investors continue to buy the dip despite the S&P 500 reaching record highs, emphasizing the importance of market weakness in light of the ongoing conflict in Iran.  
- They note that current economic and political conditions differ significantly from previous corrections, highlighting better earnings momentum and a more favorable inflation outlook.  
- As a result, JPMorgan forecasts that international and emerging markets will outperform the U.S. market, with an expectation that market leadership will become more diversified, supporting value and small-cap stocks.

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Why JPMorgan is telling investors to keep buying the dips even as market hits new highs