Wall Street firms see buying opportunity in US stocks

Major investment banks including JPMORGAN CHASE & CO and MORGAN STANLEY are advising long-term investors to capitalize on recent market pullbacks in the United States. They argue that resilient corporate earnings growth could cushion the fallout from the conflict involving Israel and Iran. The S&P 500 has climbed nearly 8% from its March lows, even as weekend talks failed to deliver a deal to end the war. Strategists at J.P. Morgan, led by Mislav Matejka, suggested that market dips driven by geopolitical shocks often prove to be buying opportunities. > Our base case remains that any further escalation is unlikely to be sustained indefinitely, and that dips driven by geopolitical shocks should ultimately prove to be buying opportunities. Analysts at Morgan Stanley, led by Michael Wilson, characterized the recent selloff as a correction rather than a prolonged downturn, citing improving earnings growth and healthier valuations. Earnings growth estimates for the S&P 500 stood at 13.9% for the first quarter of 2026, up from 12.7% before the conflict began. This sentiment aligns with a previous outlook from GOLDMAN SACHS GROUP INC, which noted that while near-term risks exist, there is little room for a bear market. Morgan Stanley currently favors cyclical sectors such as financials, industrials, and consumer discretionary goods, as well as quality growth stocks like AI hyperscalers. Additionally, J.P. Morgan noted that the valuation premium for the Magnificent Seven cohort of stocks has narrowed sharply, with their forward price-to-earnings ratio falling to 1.2x the S&P 500 from 1.7x.