The bull market is unlikely to resume until the Iran war can be resolved, the Strait of Hormuz is reopened or investors capitulate and make a true market bottom — or some combination of these events — Bob Doll said in his quarterly commentary Monday.
Doll, Crossmark Global Investments' CEO and chief investment officer, also gave an update on his 10 predictions for 2026.
"The S&P 500 has declined by 9% since its January high, with valuation multiples falling alongside rising earnings estimates. Surging oil prices, interest rates, and geopolitical uncertainty have dragged the S&P 500 P/E multiple from 23x a month ago to 20x today even as analysts have raised their earnings estimates," he wrote.
"The upcoming Q1 reporting season will be a key source of information regarding the earnings outlook," Doll added.
He noted that the season starts next week, with companies representing roughly 70% of S&P 500 market cap reporting by the end of April.
"Guidance and commentary are likely to be more informative than reported results when 1Q earnings are released," Doll wrote.
Stocks are marginally oversold, he said, adding that "the quality of any bounce from here … will be absolutely critical in gauging the market's longer-term intentions."
The war has raised recession probabilities from 15% to 25% after oil surpassed $100 a barrel, and will rise to 35% if the Strait of Hormuz remains closed for much longer, Doll wrote.
Productivity gains will be essential to avoid long-term structural inflation, according to the CEO, who also said that tax benefits from last summer's tax and spending megabill are largely being offset by higher oil prices.
"The bull market cannot resume until there is some end to the war, the price of oil recedes, and/or the Strait of Hormuz is reopened," Doll said.
As for the 10 predictions, Doll reported that three are headed in the right direction, one is heading in the wrong direction and it's too soon or too close to call the other six.
See the accompanying slideshow for his update.
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