JPMorgan warns S&P 500 could fall 10% if Iran war continues

JPMorgan warned that a prolonged war with Iran could send the S&P 500 into correction territory, with its trading desk saying the benchmark could drop to 6,720 — a 10% correction from its most recent peak. The desk said positioning signals have turned tactically bearish and that options pricing implies the S&P 500 could fall another 2.9% this week, adding to last week’s losses.

The bank’s commodities trading desk said there has been a clear escalation with oil infrastructure hit on both sides and that "the products rally seen last week is just starting." It added that "every single day of blockage through the strait creates exponentially larger problems for products down the road." JPMorgan warned declining production in the region is "rapidly approaching" a level consistent with prices hitting $120 a barrel, and noted it took nearly five months for oil to fall under $100 from its peak of nearly $125 after Russia's invasion of Ukraine.

The team said a "definitive off-ramp to the conflict" would end their bearish tactical call.

Iran

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