Leading bank urges investors to keep 'using the dips' as market leadership set to broaden

• JP Morgan differentiates current environment from 2022, noting central bank flexibility and earnings momentum provide support unlike the rising rate environment that compounded equity pain previously
• Magnificent Seven price-to-earnings multiples have fallen to their lowest level relative to the broader market in a decade, while AI-exposed stocks have derated to record lows, creating potential for short squeezes
• The bank maintains overweight stance on emerging markets versus developed markets and expects broader market participation rather than a repeat of 2025's pattern when Nvidia rallied 120% post-Liberation Day

Summary

Key Recommendation: JP Morgan's equity strategy team, led by strategist Mislav Matejka, advises investors to continue "buying the dips" during geopolitically-driven market weakness, maintaining their March call to add positions following initial market derisking.

Market Context: The MSCI World index has completed a V-shaped recovery, though JP Morgan warns further volatility from adverse geopolitical headlines remains possible. However, military, political, and economic constraints are expected to limit prolonged confrontation risks.

Key Differentiators from 2022: Current conditions differ significantly from 2022's environment, with central bank flexibility and supportive earnings momentum contrasting sharply with the rising rate environment that previously compounded equity pain.

Shift in Market Leadership: JP Morgan expects broader market participation this summer, diverging from last year's pattern when Nvidia surged 120% in six months post-Liberation Day and Magnificent Seven tech stocks dominated returns. The bank notes that Magnificent Seven P/E multiples relative to the broader market fell to decade lows before recent recovery, while AI-exposed stocks derated to record lows, creating potential for short squeezes.

Strategic Positioning: The bank highlights that dollar and bond yields have lagged the equity rebound, potentially providing additional catalysts for market movements. JP Morgan maintains an overweight stance on emerging markets versus developed markets and holds a constructive view on semiconductors.

Headwinds: Tariff concerns and earnings disappointments in China and Europe are expected to constrain certain segments.

Publication Date: April 27, 2026