Wall Street cautiously optimistic about stock market recovery

Wall Street signals potential recovery from stock selloff, but caution remains amid trade policy uncertainties ahead of tariff announcements.

In Short

Wall Street traders see signs that the recent US stock selloff may be concluding, with strategists from JPMorgan and Morgan Stanley cautiously optimistic about a potential recovery. However, they advise caution before heavily investing in equities due to pending trade policy announcements and the need for clarity on tariffs.

Traders on Wall Street are beginning to see signs that the recent US stock selloff may be ending.

Equity strategists from firms like JPMorgan Chase and Morgan Stanley believe the worst of the downturn is likely over.

Positive investor sentiment metrics and seasonal factors support this view.

Targeted tariffs

Major US stock indexes rebounded following reports of President Trump’s plan to implement targeted tariffs, alleviating some inflation and economic concerns.

The stock market had experienced a sharp decline since mid-February, with the S&P 500 Index suffering its seventh-fastest 10% drop in nearly a century, translating to over $5.6 trillion lost in market capitalisation.

JPMorgan noted that much of this decline affected momentum stocks, which had registered significant gains prior to the downturn, but this has alleviated previous crowding in that market segment.

Recent market recoveries have been noted in sectors that were hit hardest during the selloff, particularly among the so-called Magnificent Seven stocks.

Strategists, including those from Morgan Stanley, are cautiously optimistic about a potential tradeable rally, influenced by various factors including a falling US dollar and pessimistic market sentiment.