(Bloomberg) -- US equities are pricing in a recession risk much bigger than credit markets, leaving room for a positive surprise, according to JPMorgan Chase & Co. strategists.

Stock volatility and credit spreads typically move in tandem but have started diverging this year as the S&P 500 slides over fears that President Donald Trump’s policies will derail economic growth. The S&P 500 is currently pricing a 33% probability of a US recession while credit is pricing in 9% to 12% odds, strategists including Nikolaos Panigirtzoglou and Mika Inkinen wrote in a note.

“While there is clearly elevated uncertainty in the near term as the Trump Administration has at least initially prioritized more disruptive polices, the risk is that credit markets are proven right,” they said.

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US equities have slid this quarter amid concerns that Trump’s policies on trade and government jobs will hurt the economy. Markets are particularly suffering from the lack of clarity about the timeline and scale of tariffs. That’s prompting some of the biggest market voices to temper their optimism.

Goldman Sachs Group Inc. and Yardeni Research reduced their S&P 500 targets this week. Teams at Citigroup Inc. and HSBC Holdings Plc downgraded their recommendation on US equities while Morgan Stanley’s Michael Wilson expects the benchmark to drop a near 2% more to 5,500 in the first half of the year.

The S&P 500 moved into its fourth week of selling in a decline that has quickly morphed into a flight from all of last year’s winning bets. Mechanical selling flows, deleveraging from hedge funds and a collapse in sentiment saw stocks since struggling to find a floor so far.

The Nasdaq 100 has underperformed this year as investors dump expensive technology stocks amid concerns about competition and high costs in the artificial intelligence space.

There is at least one tracker of tech stocks that suggests the bout of selling may have reached a peak. Volume on the Nasdaq 100 ETF Invesco QQQ Trust Series exceeded 75 million shares this week, a threshold that was indicative of a bottom in the previous three occurrences over the past 20 months.

Equities could also be buoyed by potential buying from month or quarter-end rebalancing by mutual funds and US defined benefit pension funds as well as some sovereign wealth investors that could amount to around $135 billion, the JPMorgan strategists said.

“If US equity ETFs continue to see mostly inflows as they have thus far, there is a good chance that most of the current US equity market correction is behind us,” they wrote.

--With assistance from Joy Lee, Margo Towie and Jan-Patrick Barnert.

(Updates story throughout.)