'Market lows are in': Piper Sandler makes bold call — and shares where to invest

• The stock-market sell-off has bottomed out as uncertainty falls, says Michael Kantrowitz.
• The Piper Sandler strategist likes high-quality stocks.
• But some experts remain cautious; recession risks persist despite market optimism.

The stock-market sell-off has bottomed out, Piper Sandler strategist Michael Kantrowitz says.

Kantrowitz made the call in a client note on Wednesday afternoon, after Trump's postponement of his "reciprocal" tariffs launched a furious S&P 500 rally. It has turned out to be a bold prediction: the market melted down again on Thursday, with the S&P 500 down 5% as of 12:45 p.m ET.

The reasoning behind Kantrowitz's call is that uncertainty levels will start to fall from here.

"Assuming no full 180-degree reversion on reciprocal tariffs, I believe the market lows are in," Kantrowitz said.

"As different as this market downturn was from anything we've ever seen, in one big way we can draw a parallel. When the primary problem stops getting worse, the market finds a bottom and begins to heal," he continued. "The primary problem has been policy uncertainty."

With trade being the source of uncertainty today, Kantrowitz paired the Bloomberg Global Trade Uncertainty Index with the S&P 500's performance (inverted).

In 2018's sell-off, Fed policy was the cause of uncertainty. The market bottomed when that uncertainty dissipated.

In 2022, stocks began a new bull market run after inflation peaked. And in 2023, the market resumed its rally after 10-year yields topped out.

"Peak Uncertainty = Peak Risk Premium," Kantrowitz said.

Not everyone agrees that investors are poised to see clearer skies ahead. Jeremy Siegel, a finance professor at the Wharton School, said that remaining tariffs and consumer uncertainty will leave stocks floundering in the months ahead.

"I don't think we can challenge those February highs for quite some time," he told CNBC on Thursday.

And Bill Gross, cofounder of PIMCO, said on Thursday that Trump's flip-flopping approach to policy deters him from more volatile corners of the market.

"Would you want to own highly volatile US stocks whose price depends on whether POTUS had a good night's sleep and woke up the next morning to reverse yesterday's policies?" Gross wrote on X.

Recession and inflation risks also loom as economists and investors worry that Trump's 10% baseline tariffs and 125% tariffs on Chinese goods could lead to higher prices and cause a pullback in consumer spending. Kantrowitz sees a recession as unlikely, however.

In a call with BI on Monday, Kantrowitz said it was a good time to buy for longer-term investors.

"It's as good an opportunity as any 20% correction is — and obviously, a lot of single stocks are down a lot more — to create a shopping list of stocks that you want to own now that they're a lot cheaper, for the long term," he said.

High-quality stocks might be a particularly good bet, he said.

"At some point when things start to normalize in the economy and the financial markets, these will be stocks that can recover more quickly because they already have good fundamentals," Kantrowitz said.

Funds like the Vanguard US Quality Factor ETF (VFQY) and the JPMorgan US Quality Factor ETF (JQUA) offer investors diversified exposure to quality stocks.