War in Iran and the Investment Markets

Recently, oil and global markets have been nervous as a major military operation against Iran continues.  We expect markets to continue to be volatile for the foreseeable future. 

Inflation also continues to be a problem. 

Geopolitical events happen frequently in today’s world, usually with minimal disruptions to US equities and we don’t expect a major negative effect on the US economic outlook.  The effect of Middle East disruption on the US economy is not what it once was.  The US is now a net exporter of oil. 

How are these issues affecting the economy?  Over the past couple quarters, economic growth has quietly become the key driver behind the market’s strength.  Thanks to several factors, including pro-growth policies and Fed accommodation, the U.S. economy has stayed strong.  This continued growth builds confidence motivating investors to shift away from the crowded AI and tech sectors and into more cyclical parts of the market, which tend to perform better when the economy is strong. 

Stable economic growth remains the market’s biggest advantage in 2026, and its resilience is helping to prevent a major downturn in stocks.  This solid foundation is especially important now, as turmoil rages in the Middle East and enthusiasm for AI cools.  As long as growth remains steady, it can help guide the market through sector rotation and keep broader conditions from weakening. 

Central banks in the US and abroad continue to support global markets.  In the United States, while the Fed is nearing the end of its rate cutting cycle, investors still anticipate at least a couple more reductions.  Even modest, rate cuts help create a more favorable financial environment, which is one reason US monetary policy remains a steadying force for the markets in the intermediate term.