U.S.-Iran Tensions: Wall Street Experts Say This Is a Buying Opportunity

TLDR

• Weekend military operations targeting Iran sparked immediate market turbulence, driving oil higher while equities tumbled early Monday
• Major indices including the S&P 500 and Nasdaq rebounded to positive territory before noon Monday
• Leading Wall Street analysts recommend using the pullback as a buying opportunity
• Since 1990, stocks climbed higher one year after similar international conflicts in 80% of cases
• Federal Reserve rate reductions may provide additional market support should tensions persist

Military strikes against Iran launched by the United States over the weekend created significant turbulence across global financial markets Monday morning. Crude oil surged, equities sold off sharply, and government bond yields ticked upward as traders digested the escalating situation.

The selloff proved short-lived, however. Both the S&P 500 and Nasdaq Composite reversed course to positive territory before the midday trading session. The Dow Jones Industrial Average similarly recovered from steep early session losses.

Nvidia delivered a strong 2.9% advance Monday. Apple contributed a 0.2% gain, pushing the collective Magnificent Seven technology stocks higher by 0.4%.

The iShares Expanded Tech-Software Sector ETF had plunged nearly 35% from September highs. The fund has since rallied more than 7.6% off the previous week’s bottom.

Adrian Helfert at Westwood observed that maintaining equity positions proved correct during every comparable international crisis dating back to 1990. Among five similar events, markets posted gains twelve months afterward in four instances.

What History Shows About Markets and Geopolitical Shocks

Ryan Detrick from Carson Group highlights research demonstrating a median 2.7% S&P 500 advance three months following major market disruptions. The twelve-month median gain reaches 7.4%, with positive returns occurring 65% of the time.

Following the Hamas assault on Israel in October 2023, international equity markets climbed consistently for twelve months. One year after the 2003 Iraq War commencement, stocks had surged nearly 30%.

Veteran market strategist Ed Yardeni anticipates any oil price increase will prove transitory. He suggests reduced fuel costs could strengthen consumer spending capacity and help push inflation toward the Federal Reserve’s 2% objective.

Tigress Financial Intelligence’s Ivan Feinseth indicated the Fed might consider rate reductions if hostilities extend. Such cuts could arrive more quickly should Kevin Warsh receive confirmation as Jerome Powell’s replacement.

Key Levels to Watch for the S&P 500

Tuesday’s futures trading indicated further weakness, with Dow contracts declining nearly 800 points. Brent crude prices hovered above $83 per barrel.

The VIX volatility index held above 20, a threshold typically associated with heightened market anxiety. Year-to-date, the S&P 500 shows just 0.5% gains.

Adam Turnquist from LPL Financial cautioned that a decline through 6,775 on the S&P 500 might prompt retesting of November’s 6,522 low. Technical analysts are monitoring this level with particular attention.

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