Market Steadiness Surprises After U.S. Strikes on Iran
The U.S. military action against Iranian nuclear facilities over the weekend did not rattle the stock market as much as many expected. Despite the gravity of the situation, major stock indexes remained largely unchanged on Monday, reflecting a surprising resilience amid geopolitical tensions.
Expert Analysis: Why the Market's Calm Makes Sense
Tom Lee, co-founder and head of research at Fundstrat Global Advisors, offered insight into the market's muted reaction. Speaking on a financial news program, he referenced a famous New York Stock Exchange adage by veteran trader Art Cashin: "Sell the buildup, buy the invasion." This saying suggests that markets often anticipate conflict beforehand, pricing in concerns well before any actual event occurs.
Lee explained that prior to the U.S. strike, investors had already grown anxious, leading to notable risk-off moves throughout recent weeks. The volatility index, commonly known as the VIX and widely regarded as Wall Street’s fear gauge, was already elevated near 21—its highest point in nearly a month. As a result, much of the tension was reflected in market positioning before the attack.
Oil Prices Dip But Remain Below Early Highs
Alongside stocks, oil prices saw a volatile session, initially climbing overnight but slipping back during Monday’s trading. Despite fears that the strike might push crude prices dramatically higher—potentially reaching $120 a barrel—oil has remained relatively contained. This muted price reaction further highlights the market’s ability to absorb shocks without severe disruption.
What This Means for Stocks Moving Forward
In Lee’s view, the market successfully endured another major geopolitical stress test. Given the relatively calm response, he believes this bodes well for equities during the second half of the year. “At the start of this year, we would have called a U.S. strike on nuclear facilities a ‘Black Swan’ event—expecting a sharp drop in stocks and soaring oil. Instead, we see the market passing this challenge, signaling strength ahead,” he noted.
Key Takeaways:
- Stock markets showed resilience amid rising geopolitical tension.
- The volatility index (VIX) spiked but remained within manageable ranges.
- Oil prices climbed overnight but settled below anticipated highs.
- Investors had already priced in some risk, reducing immediate shock.
- Market's ability to absorb shocks could signal a strong finish for stocks this year.
Overall, the recent events have highlighted the complexity of investor psychology and the market’s capacity to adapt amid unfolding global risks.
