U.S. Stock Market Optimism Grows as Institutions See Recovery Ahead

Several prominent financial institutions have expressed optimism regarding the U.S. stock market, suggesting that the worst phase of the recent downturn may have passed. These institutions, including JPMorgan, Morgan Stanley, and Evercore ISI, cite various factors such as investor sentiment, market positioning, and favorable seasonal trends as reasons for their bullish outlook.

The recent decline in the U.S. stock market has been attributed to concerns over trade wars and the overvaluation of technology stocks. However, these institutions believe that these concerns may have been overstated and that the market is now poised for a recovery. The institutions' optimism is based on a combination of technical analysis and fundamental factors, such as the strength of the U.S. economy and the resilience of corporate earnings. They also note that the recent decline in the market has created attractive buying opportunities for investors.

The institutions' bullish outlook is in contrast to the pessimism that has prevailed in the market in recent months. However, they believe that the market is now at a turning point and that investors should be prepared for a potential rally in the coming months. The recent decline in the U.S. stock market has been attributed to concerns over trade wars and the overvaluation of technology stocks. However, these institutions believe that these concerns may have been overstated and that the market is now poised for a recovery.

Michael Wilson of Morgan Stanley and Dubravko Lakos-Bujas of JPMorgan both expressed more optimistic views, citing seasonal factors, a weakening dollar, U.S. Treasury yields, and extremely pessimistic market sentiment and positioning as paving the way for a "short-term tradable rebound." Julian Emanuel, chief equity and quantitative strategist at Evercore ISI, noted that recent statements from the Trump administration on the economy have "reset market expectations to an extremely pessimistic state."

Emanuel further stated, "We believe that the market's 'two steps back' phase is gradually fading, and we are now likely to see a 'three steps forward' rally." Despite this optimism, the sell-off has left Wall Street divided on whether the time to buy on the dip has arrived. While some strategists believe the market will enter a period of stability, they have not yet clearly advised clients to aggressively buy into U.S. stocks.

One significant reason for this caution is the potential impact of the comprehensive "reciprocal tariffs" policy that Trump plans to announce next month, which could once again alter investor expectations about the economic impact. Emanuel of Evercore described this as the market's "next catalyst." Wilson of Morgan Stanley is also monitoring employment, manufacturing data, and revisions to corporate earnings expectations as key indicators of whether a more sustained rebound is possible.

Dennis DeBusschere, chief market strategist and president of 22V Research, stated that the market's internal dynamics have improved, indicating that the U.S. economy is not heading towards a recession. Currently, investor sentiment is extremely low, while economic data remains robust, suggesting that if the actual impact of tariffs is minimal, returns over the next 1 month, 3 months, and 6 months could be "above normal levels." However, like other analysts, he is waiting for more concrete information on tariff policies before making a firm decision.

"Assuming tariffs do not become a major obstacle to economic growth, fundamentals should fully rebound by 2025," DeBusschere said. However, he also noted, "Our confidence that tariffs will not have severe negative consequences is not high, so we will wait until the policy is officially announced on April 2 before deciding whether to firmly adopt this longer-term stance."