Wall Street's Big Three Still Bullish on U.S. Stocks: Geopolitical Shocks Won't Alter Bull Market

Odaily According to strategists from major Wall Street banks, their bullish case for U.S. equities remains intact despite risks stemming from the war in Iran. Rising oil prices, cost-of-living concerns, and uncertainty over the Federal Reserve's interest rate outlook have driven the S&P 500 Index (SPX) to its worst two-week performance since the tariff turmoil of last April. Nevertheless, strategists from Goldman Sachs Group, Morgan Stanley, and JPMorgan Chase point out that earnings growth and valuations provide support; while valuations remain high, they are not as extreme as before. Wilson's base-case year-end target for the S&P 500 Index is 7,800 points, implying approximately 18% upside from last Friday's close. Goldman's Snider expects the benchmark index to rebound to 7,600 points.

As the war enters its third week, a sharp rise in crude oil has pushed up U.S. Treasury yields and dampened bets on Fed rate cuts due to heightened inflation concerns. The Strait of Hormuz has become a focal point, with any prolonged disruption likely to intensify market worries about a deepening of global economic risks from the conflict. Despite this, U.S. equities have so far seen only a modest pullback since the outbreak of the Iran war, with less than 20% of developed market stocks in a technically oversold condition. (Jin10)