U.S. stocks stumbled as oil prices jumped on the first trading day since the United States and Israel attacked Iran.
On Feb. 28, the U.S. and Israel began striking Iran in a campaign that killed the nation’s supreme leader, Ayatollah Ali Khamenei, and dozens of top officials and hit more than 1,000 targets inside the country, President Donald Trump said. Iran has retaliated with strikes against U.S. military bases, Israel and other nations in the Middle East.
News of the strikes almost immediately pushed oil prices higher as investors weighed the disruption to oil supplies coming through the Strait of Hormuz, where roughly a fifth of the world’s oil shipments pass. Iran also supplies about 4% of global oil.
At 10:36 a.m. ET, West Texas oil prices were last up 6.74%, or $4.52, to $71.54 per barrel.
The rise in oil prices, which if prolonged could stoke inflation fears, weighed on stocks. The blue-chip Dow was down 0.41%, or 200.4 points, to 48,777.52, while the broad S&P 500 shed 0.31%, or 21.01 points, to 6,857.87. The tech-heavy Nasdaq dropped 0.08%, or 17.676 points, to 22,650.536.
However, some market analysts said the initial reaction could fade as investors move to the sidelines until a clearer picture in the Middle East emerges.
“Early polling suggests that voters are taking a ‘wait and see’ attitude on US attacks in the Middle East,” said Stifel Chief Washington Policy Strategist Brian Gardner. “But a sustained increase in oil prices or other affordability metrics could begin to emerge, depending on length and details of the fighting.”
Angelo Kourkafas, senior global strategist at Edward Jones, said in a note: “The duration and impact of the conflict are hard to predict, but focusing on the knowns can help provide perspective for investors. Over the past 15 years, various geopolitical shocks have led to short‑lived oil spikes and limited market impact. Oil prices tend to rise ahead of these events. Markets may have already priced in much of the risk, and prices could fade from here.”
He also reminded investors that global oil market is in oversupply and the Trump administration is “strongly incentivized to avoid a sustained rise in oil prices heading into the November elections.”
Lurking opportunity?
If you can stomach the volatility and possibly some more near-term downside, some market experts say keep your eyes open for some opportunities to jump into stocks.
“Seeing that the market has recently struggled to rally on good news, this could have a negative chain reaction and drive the market into correction territory,” said Jay Woods, chief market strategist at Freedom Capital Markets. “It is never fun living through a correction. There’s always a catalyst for a sell-off, and this time it’s the Iranian conflict. If there is a silver lining, it’s that these market disruptions often bring opportunity if you know where to look.”
Though Woods said it may be too early to find the gems, Adrian Helfert, chief investment officer of multi-asset strategies at Westwood, said diversified investments should be able to weather the volatility.
“Staying invested has been the right call in every comparable event since 1990,” he said. “Across five similar geopolitical shocks, equities were higher twelve months later in four out of five cases. Selling into the initial panic has historically been the most-costly decision an investor can make.”
Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at [email protected] and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday.
This article originally appeared on USA TODAY: Oil prices jump, stocks stumble after US strikes Iran
Reporting by Medora Lee, USA TODAY / USA TODAY
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