Long-term investors should view the recent weakness in the S&P 500 (SPX) as a buying opportunity and interpret elevated bearish sentiment and oversold conditions as contrarian indicators, analysts from JPMorgan wrote on Monday.
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On March 23, JPMorgan advised clients to begin adding exposure. Since then, the S&P 500 has returned 4%, driven by U.S.-Iran de-escalation hopes. The firm also points to rising EPS estimates for the benchmark index as a key driver of growth.
Volatility could return if tensions reemerge between the two sides, although JPMorgan believes that investors with a three- to twelve-month time horizon should view pullbacks as an opportunity to buy the dip.