JPMorgan’s trading desk thinks investors need to tread carefully, even as stocks hold up well in the face of uncertainty around the U.S.-Iran conflict. The major averages closed well off their lows on Tuesday, with investors seemingly stepping in to scoop up shares at a discount, as they monitored the latest out of the Middle East. At one point in the day, the Dow Jones Industrial Average lost more than 1,200 points. It closed just 400 points lower. The S & P 500 and Nasdaq fell as much as 2.5% and 2.7%, respectively, before ending the day down less than 1%. Traders also bought the dip on Monday, with the S & P 500 and Nasdaq seeing slight gains while the Dow posted a small decline. .DJI mountain 2026-03-02 Dow this week Still, traders at JPMorgan aren’t sold that the worst is over. “We remain Tactically Cautious and feel it is too early to [sound] the ‘all clear’. Given the extreme moves globally, we should see a relief rally but think that is something the market will fade until there is a defined off-ramp which is difficult to visualize given the shifting US objectives, lack of known (to the market) Iranian leadership, and ongoing escalation,” they wrote to clients. Indeed, other markets around the world have suffered massive losses. South Korea’s Kospi — one of the hottest markets this year — crashed by 12% overnight after plunging 7% on Monday. Tuesday’s drop was its biggest ever going back to 1985. Chinese, Japanese and Taiwanese equity indexes are also down for the week. In Europe, the Stoxx 600 index is down more than 3% despite rising more than 1% on Wednesday. What to do JPMorgan traders advised clients stay long energy and the dollar index as geopolitical fears remain elevated. Within equities, they said to buy aerospace and defense stocks, “or reversing popular pairs trades, e.g. +Software/-Semis).” U.S. crude futures are up 10% this week, while the S & P 500 energy sector has climbed 1%. The dollar index has gained more than 1% in that time as well, while the iShares U.S. Aerospace & Defense ETF (ITA) is up 0.5% — while the S & P 500 has shed 0.9%.
