When a war ends and oil falls, the usual move is to pile into energy and other comeback plays. JPMorgan's market team has a different idea, and it's telling clients to stay with tech.
The call comes as a deal to end the U.S.-Iran war reshapes the market. The trade flips the usual war-ends playbook on its head.
The U.S. and Iran agreed to end a war that had dragged on for about four months. A formal signing is set for Friday in Switzerland.
President Trump signed a memo laying out the deal on June 14. Stocks jumped when markets opened.
The war had rattled markets for months. Traders had been waiting for any sign it would end.
The Dow rose about 600 points to a record. U.S. oil fell close to $80 as fears eased over the Strait of Hormuz, the narrow lane a big chunk of the world's oil passes through.
Oil had spiked during the war. It fell about 5% on the news.
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A deal like this can spark a "risk-on" move, where investors buy riskier assets like stocks across the board. JPMorgan's team thinks that broad rally fades fast.
When it does, money tends to crowd back into a few winners. They expect tech to lead that pack, with bank stocks as a smaller second bet, instead of rotating into energy.
The thread tying it together is AI. They want to stay long the global AI trade, with most of the weight on U.S. firms.
They still like pairing tech with stocks that do well when growth picks up. But they want to stay nimble on bets tied to oil and interest rates.
Big tech names led Monday's jump. Chip stocks and Meta were among the winners.
The whole plan rests on one thing going right. The deal still has to get signed on Friday.
JPMorgan warns it could fall apart before then, which would yank the rug out from under the rally. If that happens, the part of the market with the most to lose is the same one they like best.
Tech led the climb. So tech would feel the drop.
A failed deal could also send oil back up. That would hit the whole market, not just tech.
Friday's signing is the next big test. It will tell traders whether the upbeat mood holds or cracks.
A clean deal keeps the AI trade humming. A collapse hits the high flyers hardest.
Investors will also watch oil and bond yields for clues. For now, Wall Street's biggest bank is betting the rally stays in tech.
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