The Israel-Iran conflict is shaking the markets but nervous investors arent panicking
Wall Street’s myopia was on full display in the immediate aftermath of the Israeli airstrikes against Iran.Many of us were worried about the possibility of World War III as we saw the attacks almost in real time Thursday night.Many of my sources were trying to gauge impacts on the Dow, oil prices and interest rates. You can make a good case that there is a place for such shortsightedness.
Leave the far-reaching geopolitical analysis to those who are better equipped to game-plan those outcomes, and the investor class should stay in its lane.People still have to save for retirement, invest those savings, even if the Middle East is imploding. That said, the Wall Street take on the contretemps is certainly worth dissecting.
You can glean, if you look through the conflict’s short-term impact on specific pieces of economic data and push the smart money on their meaning, some interesting broader conclusions about how the Israel-Iran conflict will ultimately shake out. The market’s top-line response was muddled.Stocks initially sold off sharply, then came back only to tank into the close as Iran retaliated against Tel Aviv.
Oil prices — which are always sensitive to conflicts in the Middle East — jumped about 7%. But we’ve all seen worse on less existentially serious stuff.The Dow closed down less than 800 points; the rollout of the Trump tariff plan — before Treasury Secretary Scott Bessent began putting the old genie back in the bottle to prevent an economic meltdown — saw far more wild moves in all sorts of investments. When the trade war was raging, bond prices at one point tanked so much, you would think we were on the verge of the apocalypse.
On Friday, the 10-year bond yield rose but is still below 4.5%, meaning people weren’t rushing to the safe haven of Treasuries to plan for the worst.Gold rallied, but it’s been running hot for weeks amid the fears of tariff-induced inflation. In other words, it seems like investors are nervous, but ...