Commentary: Why isn't the stock market freaking out more over the Iran war? Here's why

This is read by an automated voice.Please report any issues or inconsistencies here.

Since the end of February, the three major stock market indices — the Standard & Poor’s 500, the Dow Jones industrials and the Nasdaq composite — have fallen by a few percentage points.One might ask: That’s all? Doesn’t the market know there’s a war on?Yes, the stock market knows.It just doesn’t care as much as you might think it should.It feels like this drawdown should be worse than this given everything going on in the world.— Ben CarlsonHistory tells us that we shouldn’t be all that surprised.

Although geopolitical events like the launch of military actions tend to rattle the securities markets in the short term, investors eventually shift to the long view, assuming that these conflicts will eventually be resolved and the door reopened to bullish sentiment.The major downturns of the past, such as the crashes of 1929, 2000 and 2008, have been caused less by external events than by business and investment internals, such as threats to economic structure — over-leveraging in the first, the dot-com crash in the second and the housing crash in the third.

Those were genuine crashes, not short-term downturns.Commentary on economics and more from a Pulitzer Prize winner.By continuing, you agree to our Terms of Service, which include arbitration and a class action waiver.

You agree that we and our third-party vendors may collect and use your information, including through cookies, pixels and similar technologies, for the purposes set forth in our Privacy Policy such as personalizing your experience and ads.The Iran war hasn’t yet taken on the coloration of an economic threat, although that bulks large on the horizon if the disruption of oil supplies created by the closing of the Strait of Hormuz continues or tightens or the Middle East energy infrastructure sustains more damage.

Indeed, two of the most severe downturns of recent times are associated with o...