Stocks usually look past geopolitical events, but they shouldn't be ignored 🫣

Staying invested doesn't mean dismissing the risk of things getting worse 🤔

Tensions are high in the Middle East following Israel’s attack on Iran last Friday.

From a markets perspective, an extended conflict or escalation risks more market volatility while threatening economic activity.

“Developments in Israel/Iran since late last week have come at a complicated time for the U.S. equity market,” RBC’s Lori Calvasina wrote on Sunday.

She highlighted three issues for the stock market: 1) Heightened national security policy uncertainty tends to put pressure on valuations, which are already elevated; 2) Investor, consumer, and business sentiment, which rebounded recently, remain fragile; and 3) Conflict in the Middle East puts upward pressure on oil prices at a time when inflation is in focus.

Investors should not ignore geopolitical events, since they can vary significantly and have a profound impact on the markets, economy, and policy.

That said, history suggests the incremental market volatility tied to the recent escalation could prove short-lived.