The S&P 500 ended Monday flat, showing that US stock markets are strong even though tensions between the US and Iran are rising. Investors were weighing geopolitical risks. Oil and gold prices went up, but stocks bounced back from losses during the day as people expected short-term trouble.
The Dow Jones fell only 73 points after falling 600 points at first. The Nasdaq Composite rose 0.4% thanks to tech stocks bouncing back. Futures fell sharply on Tuesday morning after new US and Israeli attacks on Iran, which showed that the market was becoming more volatile. Shares in defense companies like Lockheed Martin went up as much as 6%, while shares in airlines went down because of worries about fuel costs.
Iran’s threats, including the possibility of closing the Strait of Hormuz, raised oil prices because they raised concerns about supply disruptions. As a safe-haven asset, gold rose for the fifth day in a row. Analysts point out that the S&P 500 usually drops 0.9% in the short term but rises 3.4% six months after a crisis. Other things that people are worried about are inflation making it harder for the Fed to set policy and AI stocks being sensitive to interest rates.
Wall Street thinks there will be a short war, since stocks have always bounced back quickly from tensions in the Middle East. But a long war could raise crude prices, which would cause inflation and market swings. On Tuesday, Asian markets fell sharply, showing that people around the world were worried about energy shocks.
