Oil Prices Jump, Stocks Tumble After US Strikes Iran
US stocks stumbled as oil prices jumped on the first trading day since the United States and Israel attacked Iran.
On February 28, the US and Israel began striking Iran in a campaign that killed the country’s supreme leader, Ayatollah Ali Khamenei, and dozens of senior officials and hit more than 1,000 targets inside the country, President Donald Trump said. Iran has retaliated with strikes against US military bases, Israel and other nations in the Middle East.
News of the strikes almost sent oil prices soaring as investors weighed disruptions to oil supplies from the Strait of Hormuz, through which about a fifth of the world’s oil exports pass. Iran also supplies about 4% of the world’s oil.
At 10:36 am ET, West Texas Intermediate oil prices were up 6.74%, or $4.52, at $71.54 a barrel.
Rising oil prices, which if prolonged could fuel fears of inflation, weighed on the stock. The blue-chip Dow fell 0.41%, or 200.4 points, to 48,777.52, while the broader S&P 500 shed 0.31%, or 21.01 points, to 6,857.87. The tech-heavy Nasdaq fell 0.08%, or 17.676 points, to 22,650.536.
However, some market analysts say the initial reaction may fade as investors step aside until a clearer picture emerges in the Middle East.
“Early polling suggests voters are taking a ‘wait and see’ attitude toward US attacks in the Middle East,” said Stifel’s Washington-based chief policy officer Brian Gardner. “But continued increases in oil prices or other metrics of affordability could begin to emerge, depending on the length and details of the conflict.”
Angelo Kourkafas, chief global strategist at Edward Jones, said in a note: “It’s difficult to predict the timing and impact of a conflict, but focusing on the known can help give investors perspective. Over the past 15 years, various political shocks have led to a temporary spike in oil prices and a limited impact on markets. It can disappear here.”
He also reminded investors that the global oil market is oversupplied and the Trump administration is “highly motivated to avoid rising oil prices in the November election.”
A chance to hide?
If you can’t close out the volatility and possibly the near-term decline, some market experts say keep your eyes open for some opportunities to get into the stock.
“As the market has recently struggled to find good news, this could have a negative reaction and put the market in a correction zone,” said Jay Woods, chief market strategist at Freedom Capital Markets. “It’s never been fun to live in a correction. There’s always an incentive to sell, and in this case the Iran conflict. If there’s a silver lining, it’s that these market disruptions often bring opportunity if you know where to look.”
While Woods said it may be too early for values, Adrian Helfert, chief investment officer for multi-asset strategies at Westwood, said diversified investments should be able to withstand volatility.
“Staying invested has been the right call for all comparable events since 1990,” he said. “In five similar national emergencies, stocks were higher twelve months later in four out of five cases. Selling on the initial panic was the most expensive decision an investor could make.”
Medora Lee is a money, markets, and personal finance reporter for USA TODAY. You can find him at [email protected] and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday.
This article first appeared in USA TODAY: Oil prices jump, stocks stumble after US strikes on Iran
Reported by Medora Lee, USA TODAY / USA TODAY
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