Is Wall Street underestimating the impact of Iran war? JPMorgan warns: S&P 500 may pull back 10%

Cailian Press, March 10 (Editor: Xia Junxiong) On Monday (March 9) local time, Andrew Tyler, Head of Global Market Intelligence at JPMorgan, issued a report stating that as the Iran conflict persists and international oil prices break through $100 per barrel, the S&P 500 index could decline by about 10% from its high, to around 6,270 points.

Although the Iran conflict has lasted over a week, the response of the U.S. stock market has so far been unusually mild—except for a few brief fluctuations and dips. Even Goldman Sachs CEO David Solomon was surprised by Wall Street’s “moderate reaction” to the conflict.

However, Tyler warned in his Monday report that his outlook has shifted from tactical to bearish, and investors are not yet prepared for a decline, “current positions remain neutral, lacking extreme de-risking measures.”

On Monday, as the war expanded and shipping pressure through the Strait of Hormuz increased, oil prices surged to $120 per barrel. However, news that the G7 is considering releasing strategic oil reserves caused oil prices to fall sharply. As of press time, Brent crude traded below $100 per barrel.

Tyler’s team of analysts stated that each day the Strait of Hormuz is blocked will cause exponentially greater problems for subsequent product transportation.

They emphasized in the report that only a “full end to the conflict” can end their bearish strategic outlook.

The root cause of market turmoil is not the war itself, but the impact of triple-digit oil prices on inflation, economic growth, and corporate earnings expectations.

Last week, JPMorgan Asset Management pointed out that the danger of energy shocks lies in their dual effects of causing recession and inflation. The firm specifically warned that the Strait of Hormuz is the real pressure point, as it carries about one-fifth of the world’s oil supply.

On Monday, JPMorgan also noted in another report that if Iran’s Hark Island is attacked, most of Iran’s oil exports would be immediately halted. This could trigger Iran’s retaliatory actions in the Strait of Hormuz or attacks on Middle Eastern energy infrastructure.

Hark Island is a key hub for Iran’s oil exports, handling about 90% of the country’s exported crude oil. Media reports indicate that the White House is discussing deploying troops to seize Hark Island.