Extreme sadness gives birth to happiness? JP Morgan analysts believe that the US stock market may see a strong rebound.

On Wednesday, Ilan Benhamou, a member of J.P. Morgan's stock derivatives sales team, stated that market participants are currently in the most pessimistic state since the start of the COVID-19 pandemic. However, he still believes that there is a possibility of a rebound in the US stock market. Benhamou pointed out that with the economic slowdown, rising recession risks, downward revisions in corporate profit expectations, and declining stock price targets, investors find it hard not to become even more pessimistic. However, he emphasized, "Usually, the strongest rebounds often occur when everything seems most pessimistic." In a report to clients, Benhamou wrote, "The market is controlled by negative sentiment. For contrarian investors like me, it is difficult not to go contrarian, especially at a time when the most important macroeconomic weekly data is arriving." He had previously recommended investors to pause their strategy of selling on highs, but acknowledged that this view had not been validated by the market. Last week, US stocks fell again, with the S&P 500 index falling 1.5% and the Nasdaq 100 index falling 2.4%. Tech stocks continued to be under pressure, with five out of the past six weeks seeing declines of over 2%. Due to the uncertainty in the artificial intelligence industry, the market no longer sees large tech stocks as a safe haven. Although the market generally expects the worst-case scenario from the tariff policy that the Trump administration is expected to announce, Benhamou believes that the final policy may be more ambiguous than expected, and the market's reaction to it could change rapidly. He predicts that the market may see an "inevitable rebound" as it has already absorbed the most pessimistic expectations, and changes in trading sentiment could be as rapid as during the decline.