U.S.-Iran Conflict is a ‘Buy-the-Dip’ Opportunity, Says Wall Street

Amid heightened tensions in the Middle East, several Wall Street firms have urged investors to take advantage of lower stock prices.

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Geopolitical events may create short-term volatility, although long-term returns have largely been unaffected by them. “We would look for a 1-2 week decline in risk assets, creating a buy-the-dip opportunity as the market looks through the initial pullback,” said traders at JPMorgan.

S&P 500 Tends to Bounce After Geopolitical Shocks

Wells Fargo echoed JPMorgan’s stance, adding “geopolitical dips should be bought, usually recovering in two weeks.”

Since World War II, the S&P 500 (SPX) has an average loss of 0.9% following a major geopolitical event, according to Carson Investment Research. However, the index returns 0.8% three months after such an event and 3.4% six months after.

Meanwhile, Wall Street has held firm on its year-end price target, which implies upside of about 10% from current levels.