JPMorgan Chase warns that US stocks could fall by 10% due to the Middle East conflict, and the market is not yet prepared.

JPMorgan Chase's trading arm stated that a war with Iran could trigger a drop of up to 10% in the S&P 500 from its highs, a scenario U.S. stock traders are not yet prepared for. Andrew Tyler, JPMorgan's global head of market intelligence, said on Monday that he has turned "tactically bearish" on U.S. stocks due to the lack of signs of de-escalation in the Middle East conflict and oil prices breaking through $100 a barrel. A pullback would mean the S&P 500 would fall 10% from its highs to around 6270 points, about 7% lower than Friday's closing level. Tyler stated that investors' current positioning is not prepared for a decline, with "current positioning generally neutral and lacking extreme risk-averse operations." Energy stocks were net sold off last week as traders "expected a de-escalation." However, oil prices jumped above $100 a barrel after several Gulf states cut production, raising concerns about long-term supply shocks and stagflation risks. Tyler believes these risks could quickly subside if the conflict does not continue. "This tactical assessment will end once a clear path for de-escalation emerges, as the underlying macroeconomic fundamentals still support risk assets." (Jinshi)