Stocks are still set up to do well near term despite U.S.-Iran talks failing over the weekend, according to JPMorgan traders. The desk reiterated its tactically bullish stance on markets, noting that, “as talks resume we think it most likely that the 2-week ceasefire is extended or that an agreement is made before the deadline.” “The major driver of the view are steps to normalize the [Strait of Hormuz] supply chain crunch. Combine that with (i) a macro picture that remains resilient based on the strength of household and corporate balance sheets with potential tailwinds from [One Big Beautiful Bill Act] and labor productivity; (ii) a strong earnings outlook; and, (iii) a tariff regime that continues to see net effective tariffs trending lower,” traders added. In other words, Monday’s early declines may be a buying opportunity. Futures tied to the Dow Jones Industrial Average shed around 400 points, or 0.9%. S & P 500 and Nasdaq-100 futures lost 0.5% each. Still, JPMorgan’s trading desk acknowledges there are risks to its market stance, including: Conflict resolution fails and the war escalates “Weaker-than-expected earnings and / or lack of guidance from MegaCap / Large-cap companies;” A spike in bond yields due to expectations of higher inflation. Crude prices spiked Monday after the U.S. announced it would place a blockade on Iran’s ports following the peace talks breaking down. West Texas Intermediate jumped 7% to trade back above $100 per barrel . What to buy The trading desk likes small caps along with tech and cyclical stocks. Traders added that, following client conversations, many think the “Magnificent Seven” — the group encompassing Meta Platforms , Amazon , Apple , Microsoft , Nvidia , Alphabet and Tesla — may be “too cheap.” The entire group, with the exception Tesla, trades between 20 and 29 times forward earnings, FactSet data shows. The Elon Musk -led electric car maker has a multiple of 163.
