The stock market has been resilient despite the U.S. bombing of Iranian nuclear facilities over the weekend. Tom Lee, co-founder and head of research at Fundstrat Global Advisors, said the market’s reaction is not surprising. “In some ways, it’s not a surprise,” Lee said.
“Markets were kind of already nervous and anxious, and we’ve already seen de-risking, and the VIX was already elevated. So I think in some ways, this is probably pretty typical.”
Lee cited longtime New York Stock Exchange floor trader Art Cashin’s adage, “sell the buildup, buy the invasion,” as a reason for the market’s muted response. He believes Monday’s moves strengthen the case for stocks to perform better in the latter half of the year.
At the start of this year, we would have said the U.S. bombing a nuclear facility is a ‘Black Swan.’ Oil would be $120, stocks should be down 10%,” Lee added. “And then we have the event, and oil is not really surging. So I’d almost say that you put another stress test into the market, we’ve seen it pass it, and I think it means stocks should do pretty well into year’s end.”
Market resilience despite bombing tensions
Jeremy Siegel, the chief economist of WisdomTree and a professor of Finance at The Wharton School at the University of Pennsylvania, also predicts that stocks can still soar to new records despite the conflict. He suggested that the development could ultimately be a positive for the stock market. Siegel told news outlets on Monday that he believes the market is likely to continue edging higher in the short term.
He predicts that “new all-time highs in the S&P 500 are certainly attainable over the next several weeks,” contingent on Iran taking no retaliatory action towards the US. The market’s reaction has been muted so far, with minimal price action among major indexes on Monday and oil slipping back after initially spiking following the attacks. Siegel described the attack as “a success to neutralize Iran,” noting that he saw this as ultimately being positive for stocks as it would likely lead to a faster resolution for the countries involved.
