Despite several confrontations between Israel and Iran over the weekend and on Monday that have left hundreds of civilians dead, investors in the U.S. seemed to shrug off the escalating tensions in the Middle East as stocks rebounded to start the week.
Jeff Buchbinder, chief equity strategist for LPL Financial, says the U.S. market is holding up well due to a confluence of factors, including that both Iran and Israel have an “interest in keeping the conflict contained.”
“There are several key questions to answer before we know how stocks will handle this geopolitical shock, including how much of Iran’s energy infrastructure will be impaired and for how long, whether Iran’s nuclear capabilities will be completely wiped out, and whether the current regime will remain in power,” says Buchbinder.
The conflict in the Middle East is adding yet another layer of uncertainty to the economy, in a time when President Donald Trump’s tariff policies are causing concern, as are the White House’s immigration policies and the GOP tax bill.
Investors will also be watching the Federal Reserve meeting this week. Though officials have signaled a hold on interest rates is likely, all eyes will on on Chair Jerome Powell for information on when the central bank could move.
