Buy on the dips: JPMorgan believes stocks will rally despite the situation in the bond market

Investors should buy stocks during any pullbacks, despite rising global government bond yields and inflation concerns, according to JPMorgan Chase strategists led by Mislav Matejka. According to their assessment, the rally in global stock markets will continue thanks to steady growth in corporate earnings—and by the end of 2026, U.S. stocks may cede the lead to assets from other regions, Bloomberg reports.

Improved earnings forecasts mean that any market pullback will simply make stocks cheaper by lowering the P/E ratio (the ratio of a stock’s market value to the company’s earnings per share), noted the JPMorgan research team. “As corporate earnings continue to grow, any decline in stock prices will make them cheaper. We believe investors should continue to use pullbacks as buying opportunities,” Mateyka and his colleagues wrote in a research note. The positive macroeconomic backdrop is also confirmed by business activity indicators in the U.S. and eurozone manufacturing sectors, which are near four-year highs, the analysts noted. Even a moderate tightening of central bank policy is unlikely to disrupt the favorable outlook for stocks, unless inflation expectations change significantly, JPMorgan emphasized.

Global stocks have shown resilience in recent weeks, even as government bond yields have risen to multi-year highs. For example, the S&P 500, a broad U.S. stock market index, has gained nearly 13% since the start of the year, while the global MSCI All-Country World Index has risen about 14%. The European Stoxx 600 index is also rising, but lags behind U.S. stocks with a gain of 9.6% since the start of the year. However, JPMorgan warns that the situation could change by the end of 2026, with market leadership shifting from the U.S. stock market to other regions: “We maintain our view that non-U.S. stocks have a good chance of outperforming the U.S. market for the second year in a row,” analysts noted.

Last year, the MSCI All-Country World Index posted an annual return of 22.87%, while the S&P 500 ended 2025 with a total return of 17.9% (including dividends).

Mateyka’s forecast from June—that global stocks could hit new highs in the second half of 2026—is already proving accurate, Bloomberg notes: Since its publication, the MSCI All Country World Index has risen 2.4% and is trading near record levels, the agency reports.

This article was AI-translated and verified by a human editor