NEW YORK — A sharp, week-long retreat in U.S. equities has prompted several market strategists to refresh their buy lists, with large-cap financials emerging as early favorites.
In notes circulated late Monday, three independent research desks separately highlighted JPMorgan Chase & Co., Visa Inc. and Berkshire Hathaway Inc. as “high-quality compounders” that have fallen far enough to present what one analyst called “a compelling margin of safety.” The S&P 500 has shed roughly 4 percent since last Tuesday, its steepest slide of 2024, as sticky inflation data forced traders to pare back expectations for rapid Federal Reserve rate cuts.
“These names combine fortress balance sheets with durable fee or float income. That makes them some of the few true defensive plays inside the financial sector,” said Lauren Park, senior equity strategist at LibertyView Research, who placed 12-month price targets of $220 on JPMorgan, $310 on Visa and $430,000 on Berkshire’s Class A shares.
JPMorgan, down 6 percent from its early-March record, remains the country’s largest bank by assets and still boasts a 2.3 percent dividend yield. Visa, which slipped below $270 for the first time since January, processes roughly $12 trillion in annual payment volume and has more than $25 billion of cash on hand. Berkshire, meanwhile, finished Monday’s session at $410,205 after surrendering nearly $25,000 a share in five sessions; analysts note that Warren Buffett’s conglomerate is sitting on a cash pile above $160 billion that can be redeployed if valuations keep falling.
Not everyone is convinced. Some macro strategists argue that bank earnings could come under renewed pressure if the Fed keeps rates higher for longer, compressing net-interest margins, while consumer-credit metrics are already showing signs of softening. “Cheap can always get cheaper in a late-cycle slowdown,” cautioned Chris Mooney, portfolio manager at RidgeRock Capital.
Even so, options positioning suggests bargain hunters are beginning to nibble. According to Cboe data, bullish call-volume on JPMorgan and Visa jumped 22 percent Monday versus their 20-day averages. Whether that optimism sticks may hinge on next week’s personal-consumption-expenditures report, viewed by traders as the Fed’s preferred inflation gauge.
Should price pressures ease, analysts say the trio could reclaim lost ground quickly. “If we get just one benign inflation print,” Park added, “the market’s focus will shift back to earnings quality—and on that front these companies still rank near the top of the league table.”
For investors eyeing entry points, Park and her peers recommend phasing in positions rather than trying to call the exact bottom. “Volatility may stay elevated through the first Fed rate cut,” said Mooney. “But for longer-term holders, moments like this are often where excess returns are seeded.”