JPMorgan cuts its S&P 500 target and warns investors are dangerously complacent about Iran war risks, oil above $110, and the hit to growth, earnings, and stocks.

JPMorgan became the latest — and most prominent — Wall Street institution to sound the alarm on Thursday, cutting its year-end S&P 500 price target from 7,500 to 7,200 and warning that equity markets are making a “high-risk assumption” by pricing in a quick resolution to the Middle East conflict. The downgrade, issued as Iranian strikes on Gulf energy infrastructure sent Brent crude surging above $110 per barrel, signals a growing conviction among institutional analysts that the war’s economic fallout has been systematically underpriced.

“We believe the market is pricing in a quick end to the Middle East conflict and reopening of the Strait, giving a low probability to a potential demand hit,” JPMorgan wrote in its note. “This is a high-risk assumption given that S&P 500 and oil correlations typically turn increasingly more negative after a ~30% oil spike.”​

Oil prices have surged more than 46% since the U.S. and Israel launched their initial strikes on Iran, yet the S&P 500 has fallen less than 4% — a divergence that JPMorgan’s strategists view as a sign of dangerous market complacency rather than genuine resilience. While high-risk segments such as software stocks, South Korean equities, and crypto have sold off, broad equity positioning has barely shifted, with investors hedging rather than derisking in earnest.​

The bank’s core warning centers not on inflation — the conventional oil shock narrative — but on demand destruction. JPMorgan argues that if the supply disruption persists, “GDP, demand, and revenues will adjust lower through forced demand destruction.” The bank estimates that each sustained 10% increase in oil prices shaves 15 to 20 basis points off GDP growth. If Brent holds near $110, consensus S&P 500 earnings estimates could fall by 2 to 5%.

The structural supply picture compounds the concern. Oil supply shut-ins have already climbed to 8 million barrels per day — the highest on record — and JPMorgan warned that cuts could reach 12 million barrels per day, equivalent to roughly 11% of global production.​

The wealth effect adds a secondary channel. With U.S. households holding over $56 trillion in stocks and mutual funds, a sustained equity drawdown would feed back into consumer spending — JPMorgan estimates a 10% drop in the S&P 500 could reduce U.S. consumer spending by approximately 1%. “The combined impact of persistently high oil prices and a bear market in the S&P 500 has a detrimental effect on demand, significantly amplifying the negative impact on growth,” the bank concluded.​

If the S&P 500 selloff extends below the 200-day moving average near 6,600, the bank said meaningful support may not emerge until the 6,000–6,200 range. For now, with the war entering a dangerous new energy-infrastructure phase and no diplomatic off-ramp in sight, JPMorgan’s revised target may prove optimistic rather than cautious.

US Securities and Exchange Commission (SEC) Chair Paul Atkins has clarified how the agency intends to approach digital asset regulation following an interpretative notice issued this week.

In prepared remarks for a Thursday speech at the Practising Law Institute, Atkins said that the SEC would take a different approach to digital assets than its previous “regulation by enforcement” campaign. According to the SEC chair, the agency would first focus on its interpretation of how federal securities laws apply to crypto following the signing of a memorandum of understanding with the Commodity Futures Trading Commission (CFTC) last week.

“[…] While the interpretation provides long-needed clarity, I should like to assure this audience that it amounts to a beginning, not an end,” said Atkins.

The agency’s interpretation, released on Tuesday, specified that most cryptocurrencies were likely not securities under federal law, with the chair telling attendees at the DC Blockchain Summit that “only one crypto asset class remains subject to the securities laws” under the agency’s interpretation: namely, “traditional securities that are tokenized.”

Atkins later clarified that digital commodities, digital tools, digital collectibles including non-fungible tokens (NFTs), and stablecoins were digital assets typically not falling under the SEC’s purview.

Related: SEC gives go-ahead to Nasdaq for tokenized trading trial

While the SEC interpretation could significantly change how the agency approaches crypto regulation and enforcement, a market structure bill working its way through Congress is also expected to give the CFTC more authority in regulation and oversight of digital assets. The bill, called the CLARITY Act when it passed the House of Representatives in July 2025, had not been scheduled for a markup in the Senate Banking Committee as of Thursday.

White House meets with US lawmakers behind closed doors

A spokesperson for Wyoming Senator Cynthia Lummis confirmed with Cointelegraph that Republican senators met with White House crypto adviser Patrick Witt on Thursday to discuss advancing the market structure bill. While the Senate Agriculture Committee advanced its version of the legislation in January, concerns over how to address stablecoin yield in the crypto and banking industry have effectively stalled progress in the Senate Banking Committee.

According to Lummis’ team, the meeting was “very productive and positive,” adding that lawmakers were “99% of the way there on stablecoin yield,” and “negotiations on the digital asset portions of the bill are in a good place.”

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