JPMorgan says buy equities on pullbacks

The call matters because it goes against the growing fear that higher yields automatically cap the equity market. JPMorgan says the backdrop remains constructive as manufacturing activity in the U.S. and euro zone sits near four-year highs, suggesting the economy is still healthy enough to support earnings. In that setting, even modest monetary tightening should not derail stocks unless inflation expectations shift materially higher.

The market has already shown unusual resilience. The S&P 500 is up about 13% this year and the MSCI All-Country World Index has gained roughly 14%, even with government bond yields surging. Europe’s Stoxx 600 is up 9.6% and is on track for a fourth straight annual gain, though it still trails U.S. equities.

For investors, the implication is straightforward: the market is not pricing in enough durability in earnings momentum, and that creates opportunity on every dip. JPMorgan’s Mislav Matejka also sees non-U.S. stocks continuing to outperform American equities for a second year, a view that could keep capital rotating toward Europe and other developed markets if U.S. valuations stay stretched.

Technically, the message is consistent with the broad trend. SPY has held well above its 200-day moving average, while QQQ remains supported near its long-term trend and IWM has also rebounded from summer weakness. Adalytica.com’s S&P 500 trade snapshot shows extreme fear in sentiment even as awareness remains elevated, a combination that often leaves room for further gains when positioning is cautious but the macro backdrop is not broken.

The bigger narrative is that this remains an earnings-led bull market, not a pure liquidity trade. If profit revisions keep improving and inflation does not reaccelerate sharply, the better strategy is to buy weakness rather than chase caution. The market underestimates how far this rally can travel before fundamentals truly bend.