JPMorgan, Morgan Stanley: Buy the Oil Selloff
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- JPMorgan strategist Mislav Matejka argued it's "too late to sell" and that exiting now risks being "whipsawed," recommending capital goods, semiconductors, and consumer cyclicals on any further weakness
- Morgan Stanley's Mike Wilson said the correction is "mature in time and price," noting half of Russell 3000 names are down 20%+ from 52-week highs and 40% of S&P 500 names are similarly down
- Both desks agreed oil spikes are unsustainable: Wilson noted that bull-cycle-ending oil runs historically hit 100%+, while the current year-over-year move is roughly 40%
- Wilson identified a downside floor at the S&P 500's 200-day moving average (~6,600), with a deeper technical support zone at 6,400-6,500, implying a forward P/E of about 20
- JPMorgan's research note asked "Does oil supply shock really warrant central bank hikes?" and answered no, predicting a $120-$130 oil spike would likely produce just 2-3 days of selling before a "clearing event"
- Both firms said economic fundamentals were intact before the Iran attack, citing re-accelerating forward earnings, fiscal support from the One Big Beautiful Bill Act, and the strongest ISM PMI reading since 2022
- JPMorgan highlighted that MSCI World ex-U.S. was up 11% year-to-date at end of February versus roughly flat for the S&P 500, expecting eurozone and emerging markets to resume outperformance once the conflict eases and the dollar softens
Why it matters: For active investors rattled by the oil selloff, two of the Street's biggest research desks are explicitly telling them to use weakness as a buying window. Wilson's identification of a hard S&P 500 floor at 6,400-6,500 (P/E ~20) gives managers a specific entry zone, and JPMorgan's sector tilts (capital goods, semis, consumer cyclicals) offer a concrete playbook — but both bets hinge on the Iran situation not escalating into a protracted regional war, as the article notes.
