Stock market today: Dow, S&P 500, Nasdaq waver after report of Iranian missile strikes aimed at US air bases

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5 hours ago

US stocks wavered on Monday following reports that Iran launched missiles at US air bases in Qatar and Iraq in retaliation for US strikes against Iranian nuclear sites.
The Dow Jones Industrial Average (^DJI) rose 0.2% while the S&P 500 (^GSPC) and tech-heavy Nasdaq (^IXIC) also gained 0.3%.
Stocks started the session in red territory on the heels of President Trump's decision to join Israel's attacks on Iran on Saturday. Investors are on edge over a shock surge in energy prices if Iran blocks the key Strait of Hormuz waterway, as that would have repercussions for economies worldwide.
Trump said late Saturday that the US had struck Iran's three main nuclear enrichment facilities, saying the sites had been "totally obliterated" — a claim that has since been questioned. He threatened Iran with more attacks if the country did not quickly seek peace talks.
The focus turned to Iran's retaliation on Monday afternoon after Iranian state media announced Iran launched missiles at US military bases in Qatar and Iraq and witnesses heard explosions in the Qatari capital of Doha. On Sunday, Iran's foreign minister said the country reserves "all options," raising concerns that it may block the Strait of Hormuz.
After the US bombings, oil futures surged over 4% amid jitters about disruption to energy supplies. That spike unwound by Monday afternoon amid skepticism that Iran will follow through on its threat to block the critical strait. Brent crude (BZ=F) futures traded at $73 a barrel while WTI crude futures (CL=F) hovered near $70.
Elsewhere in markets, gold (GC=F) ticked higher, also switching course amid wavering haven demand.
Stocks moved into positive territory earlier in the session after Federal Reserve governor Michelle Bowman expressed support for a rate cut "as soon" as July, becoming the second central bank policymaker to be that explicit in recent days about an easing of monetary policy in the near term.
Oil prices fell on Monday after Iran's retaliatory moves following US strikes on the country's nuclear sites appeared to spare any supply of energy products.
West Texas Intermediate fell 4%, while Brent crude also dropped more than 4% after Iranian state media said it launched missiles against US air bases in Qatar and Iraq.
Oil futures fell as Iran did not announce any closure of the Strait of Hormuz, a critical chokepoint through which roughly 20% of the world's oil products flow.
Qatar said it successfully intercepted the missile attack and there were no casualties from the incident.
Yahoo Finance's Josh Schafer reports:
Read more here.
Google's artificial intelligence model is set to drive $4.2 billion in subscription revenue within its Google Cloud segment in 2025, according to an analysis from Bank of America on Monday.
That includes $3.1 billion in revenue from subscribers to Google's AI plans with its Google One service, Bank of America's Justin Post estimates.
Post also expects that the integration of Google's Gemini AI features within its Workspace service will drive $1.1 billion of the $7.7 billion in revenue he projects for that segment in 2025.
'We believe Google has moved beyond the catch-up phase in the LLM [large language model] race, with Gemini now comparing favorably with leading peer models from OpenAI, Anthropic, xAI, and Meta,' Post wrote, saying that AI is a 'major growth driver for Google Cloud.'
But, Post added, 'While the revenue opportunity is growing with subscriptions, Google will likely see a significant deterioration of market share relative to its ~90% share of search revenues.'
At the same time, Alphabet is set to spend $75 billion on AI investments in 2025.
'If revenue growth doesn't keep pace with rising Capex, higher spending could weigh on free cash flow and margin projections,' Post wrote.
He holds a Buy rating and $200 price target on Alphabet (GOOGL, GOOG) shares.
Yahoo Finance's Anjalee Khemlani reports:
Read more here.
Yahoo Finance's Claire Boston reports:
Read more here.
Yahoo Finance's Jennifer Schonberger reports:
Read more here.
President Trump called for lower energy prices as he posted on social media on Monday: "EVERYONE, KEEP OIL PRICES DOWN. I'M WATCHING! YOU'RE PLAYING RIGHT INTO THE HANDS OF THE ENEMY. DON'T DO IT!"
He also wrote,"To The Department of Energy: DRILL, BABY, DRILL!!! And I mean NOW!!!"
Oil futures fell more than 1% on Monday after spiking more than 5% on Sunday night as traders assessed whether Iran would close off the Strait of Hormuz, a critical chokepoint through which roughly 20% of the world's oil products flow.
Strategy (MSTR) stock fell as much as 3% on Monday morning after the Michael Saylor-helmed firm announced another bitcoin purchase.
The software firm turned crypto giant said in a filing with the US Securities and Exchange Commission that it bought $26 million worth of bitcoin between June 16 and June 22.
As of Monday's filing, Strategy has spent nearly $42 billion to acquire over 592,000 bitcoins since 2020. Over that time frame, the stock has soared more than 2,800% relative to the S&P 500's 78% gain.
Strategy shares pared initial losses shortly after the market opened and are down less than 1%.
At the same time, Strategy is facing two new lawsuits from investors — one filed in May, the second last week — over its bitcoin strategy. The lawsuits allege that the company misled investors about how its bitcoin strategy would affect its profits and its stock price, given the cryptocurrency's volatility.
Tesla stock (TSLA) rose 5% in early trading Monday after its robotaxi launch kicked off on Sunday in Austin, Texas.
Yahoo Finance's Pras Subramanian reports that several users on X claimed they were able to hail and ride some of the 10-20 Tesla Model Y vehicles available, which featured "Robotaxi" graphics on the sides of the cars.
Tesla CEO Elon Musk had announced the rollout on X earlier in the day, saying that customers will pay a flat $4.20 fee. Only select invited Tesla users were invited to test the robotaxi service, as it begins to scale to take on industry leader Waymo (GOOG, GOOGL).
Wedbush analyst and Tesla bull Dan Ives wrote in a note: 'We took two approximately 15 minute rides around Austin and the key takeaways are that it was a comfortable, safe, and personalized experience.'
Read more here.
US stocks wavered on Monday as oil trimmed gains and supply worries eased over Iran's possible retaliatory move following US strikes on the country's nuclear facilities.
The Dow Jones Industrial Average (^DJI) fell slightly while the S&P 500 (^GSPC) was little changed. The tech-heavy Nasdaq (^IXIC) fell slightly.
OIl futures were little changed after spiking more than 5% on Sunday night as traders assessed whether Iran would close off the Strait of Hormuz, a critical chokepoint through which roughly 20% of the world's oil products flow.
Trump Media & Technology (DJT) stock rose 4% before the market opened Monday morning after the company announced a $400 million stock buyback.
Shares of the company — in which President Trump is the majority stakeholder — have fallen roughly 48% in 2025.
Stock buybacks, a common practice that faces a fair share of criticism, reduce the amount of a company's common shares in the public market and, hence, boost its earnings per share even if its profits don't rise.
Trump Media said the buybacks 'would be funded separately from, and would not alter, Trump Media's previously announced Bitcoin treasury strategy.' The company is aiming to create a bitcoin treasury to hold the cryptocurrency on its balance sheet and announced a $2.5 billion private funding round to fund the initiative in May.
Trump Media is part of a wave of firms following in the footsteps of crypto tycoon Michael Saylor's company, Strategy (MSTR), which has seen its stock soar by buying up bitcoin.
Wedbush analyst Dan Ives wrote in a note to clients on Monday that he expects cybersecurity stocks to be in focus following the US bombing of three Iranian nuclear facilities over the weekend.
Ives wrote that 'cyber security stocks in particular [are] set to be front and center this week as investors anticipate some cyber attacks from Iran could be on the horizon as retaliation.'
'On the cyber security sector, our favorite names remain Palo Alto (PANW), Cyberark (CYBR), Crowdstrike (CRWD), Zscaler (ZS), and Checkpoint (CHKP)."
The stocks traded roughly flat premarket on Monday.
Defense stocks were modestly higher Monday during premarket trading after the US bombed three Iranian nuclear facilities over the weekend.
Palantir (PLTR), Lockheed Martin (LMT), and Northrop Grumman (NOC) rose less than 1%, while RTX (RTX) climbed 1.3%.
Palantir supplies AI-fueled defense tech to Israel, which has prompted blowback from former employees and protesters. The other three companies supply weapons to Israel through their contracts with the US government.
The defense stocks had jumped immediately after Israel's first airstrikes on Iran on June 12, but only RTX has sustained notable gains of 4% since those strikes. Lockheed Martin is up 0.3% over that time frame, while Northrop Grumman is roughly flat (up 0.1%). Palantir has risen 1.6%.
Jefferies (JEF) analyst Mohit Kumar wrote Monday, 'Market is now waiting to see how Iran reacts …​​However, we are not fully convinced around the market's sanguine reaction.'
'Defence has been one area that we have been bullish on, and we continue to maintain our overweight exposure,' he added. 'NATO countries have moved to increase defense spending with a long term goal of taking to 5% of GDP. We are typically skeptical of long term goals as goal posts do change, but it is also clear to us that defense spending needs to increase globally and not just for NATO countries.'
Energy stocks rose alongside rising oil prices in premarket trading on Monday while overall stock futures wobbled. Those with oil production in the US and outside the Middle East caught a bid as investors weighed the possibility of further disruption to the oil supply following the US strikes on Iran.
The Energy Select Sector SPDR Fund (XLE) advanced 0.6% and has risen 6% in the past month.
Here's a look at how trending energy stocks are trading this morning:
View more trending tickers here.
Yahoo Finance's Jennifer Schonberger reports:
Read more here.
Economic data: Chicago Fed activity index (February); S&P Global US Manufacturing PMI (March preliminary); S&P Global US services PMI (March preliminary); S&P Global US Composite PMI (March preliminary)
Earnings: FactSet (FDS), KB Home (KBH)
Here are some of the biggest stories you may have missed overnight and early this morning:
Trump just made the Fed's rate call even more complicated
Opinion: Trump wages 2 wars — one with trade partners, one with Iran
Why Iran could hold off blocking the Strait of Hormuz
Oil erases spike in gains in wait for Iran's response
Morgan Stanley: Geopolitical selloffs tend to fade fast
Analysts react as markets brace for Iran's next move
Dollar advances as investors brace for Iran response to US attacks
BNY Mellon approached Northern Trust for merger: WSJ
Here are some top stocks trending on Yahoo Finance in premarket trading:
Tesla (TSLA) stock rose over 1% in premarket trading after rolling out its driverless taxi service to riders on Sunday. The debut of the robotaxi was introduced to a handful of riders, which included retail investors and social-media influencers in Tesla's hometown of Austin.
Wolfspeed (WOLF) stock fell 11% in premarket trading on Monday after announcing it plans to file for bankruptcy in the US under a new restructuring agreement with its creditors. The agreement would provide fresh financing and slash debt by nearly 70%.
Northern Trust Corporation (NTRS) shares rose 4% before the bell after a report from The Wall Street Journal said that Bank of New York Mellon Corp had reached out to the asset and wealth manager and expressed interest in a merger.
Most investors will awaken today searching online for "Strait of Hormuz" after the weekend attacks from the US on Iran. For speed of analysis purposes, if this key oil shipping hub closes down (seems like it won't happen, based on everything I am seeing this morning), it could really send oil (CL=F, BZ=F) prices skyrocketing.
Here's what Goldman's team estimates:
"If oil flows through the Strait of Hormuz were to drop by 50% for one month and then were to remain down 10% for another 11 months, we estimate that Brent would briefly jump to a peak of around $110."
Read more here on Goldman's scenarios.
Gold pushed higher with the world in limbo as the US joined Israel's attack on Iran over the weekend. No formal response has been issued by Iran, with wider fallout expected.
Spot gold climbed 0.2% to $3,375.04 an ounce taking it to within $125 of its record high as investors sought safe-haven assets in a tumultuous economic situation.
Gold then sank 0.5% despite broader haven demand.
Bloomberg reports:
Read more here.
Wall Street is closely watching escalating tensions in the Middle East after President Trump confirmed that the US launched a surprise strike on Iran's nuclear sites late Saturday, marking the country's official entry into the two-week-old conflict.
Markets have held mostly steady in the aftermath of the escalation, although US stock futures fell across the board when trading opened Sunday evening.
Additionally, bitcoin (BTC-USD) prices, often viewed as a barometer of risk appetite, dropped over 1.6% to trade around $100,500 a coin. WTI crude (CL=F) and Brent (BZ=F) futures jumped, trading near $76 and $79 a barrel, respectively, as uncertainty looms over the potential closure of the critical Strait of Hormuz despite ongoing threats from Iran.
The latest surge follows oil's third consecutive week of gains on Friday.
"We wouldn't be surprised to see this spark a risk-off reaction in US equities and will be watching the futures closely on Sunday evening and Monday morning," Lori Calvasina, head of US equity strategy research at RBC Capital Markets, wrote in a Sunday evening note to clients.
"It has been and remains our belief that the longer and broader the conflict becomes, the more challenging it could be for US equities," Calvasina added. "These escalations come at a tricky time for US equities, as the S&P 500 has looked fairly valued to us (perhaps a bit overvalued) from a fundamental perspective, with more room to run from a sentiment perspective."
The analyst said her three main concerns include: first, the risk that rising national security uncertainty could weigh on equity valuations; second, the possibility that renewed geopolitical tensions could stall the recovery in sentiment that began after the early April tariff lows; and third, the potential for a spike in oil prices, which could fuel inflation concerns.
In terms of sectors, Energy (XLE) tends to outperform when oil prices rise, while Consumer Discretionary (XLY) and Communication Services (XLC), along with Entertainment, Media, and Interactive Media, tend to lag behind the broader market, Calvasina noted.
Citi analyst Stuart Kaiser agreed that sharply higher oil prices remain "the channel for geopolitical risks to impact stock markets," identifying crude prices "well above $80 a barrel" as a critical threshold for concern.
Kaiser added that options markets are now pricing in a 10% chance that oil surges 20% over the next month, up from just 2.5% two weeks ago, reflecting mounting tail risks as the conflict deepens.
Still, the analyst pointed to resiliency in stocks amid the volatility, saying, "Markets powered through extreme oil volatility and unstable geopolitical headlines to post a risk-on week."
Oil prices fell on Monday after Iran's retaliatory moves following US strikes on the country's nuclear sites appeared to spare any supply of energy products.
West Texas Intermediate fell 4%, while Brent crude also dropped more than 4% after Iranian state media said it launched missiles against US air bases in Qatar and Iraq.
Oil futures fell as Iran did not announce any closure of the Strait of Hormuz, a critical chokepoint through which roughly 20% of the world's oil products flow.
Qatar said it successfully intercepted the missile attack and there were no casualties from the incident.
Yahoo Finance's Josh Schafer reports:
Read more here.
Google's artificial intelligence model is set to drive $4.2 billion in subscription revenue within its Google Cloud segment in 2025, according to an analysis from Bank of America on Monday.
That includes $3.1 billion in revenue from subscribers to Google's AI plans with its Google One service, Bank of America's Justin Post estimates.
Post also expects that the integration of Google's Gemini AI features within its Workspace service will drive $1.1 billion of the $7.7 billion in revenue he projects for that segment in 2025.
'We believe Google has moved beyond the catch-up phase in the LLM [large language model] race, with Gemini now comparing favorably with leading peer models from OpenAI, Anthropic, xAI, and Meta,' Post wrote, saying that AI is a 'major growth driver for Google Cloud.'
But, Post added, 'While the revenue opportunity is growing with subscriptions, Google will likely see a significant deterioration of market share relative to its ~90% share of search revenues.'
At the same time, Alphabet is set to spend $75 billion on AI investments in 2025.
'If revenue growth doesn't keep pace with rising Capex, higher spending could weigh on free cash flow and margin projections,' Post wrote.
He holds a Buy rating and $200 price target on Alphabet (GOOGL, GOOG) shares.
Yahoo Finance's Anjalee Khemlani reports:
Read more here.
Yahoo Finance's Claire Boston reports:
Read more here.
Yahoo Finance's Jennifer Schonberger reports:
Read more here.
President Trump called for lower energy prices as he posted on social media on Monday: "EVERYONE, KEEP OIL PRICES DOWN. I'M WATCHING! YOU'RE PLAYING RIGHT INTO THE HANDS OF THE ENEMY. DON'T DO IT!"
He also wrote,"To The Department of Energy: DRILL, BABY, DRILL!!! And I mean NOW!!!"
Oil futures fell more than 1% on Monday after spiking more than 5% on Sunday night as traders assessed whether Iran would close off the Strait of Hormuz, a critical chokepoint through which roughly 20% of the world's oil products flow.
Strategy (MSTR) stock fell as much as 3% on Monday morning after the Michael Saylor-helmed firm announced another bitcoin purchase.
The software firm turned crypto giant said in a filing with the US Securities and Exchange Commission that it bought $26 million worth of bitcoin between June 16 and June 22.
As of Monday's filing, Strategy has spent nearly $42 billion to acquire over 592,000 bitcoins since 2020. Over that time frame, the stock has soared more than 2,800% relative to the S&P 500's 78% gain.
Strategy shares pared initial losses shortly after the market opened and are down less than 1%.
At the same time, Strategy is facing two new lawsuits from investors — one filed in May, the second last week — over its bitcoin strategy. The lawsuits allege that the company misled investors about how its bitcoin strategy would affect its profits and its stock price, given the cryptocurrency's volatility.
Tesla stock (TSLA) rose 5% in early trading Monday after its robotaxi launch kicked off on Sunday in Austin, Texas.
Yahoo Finance's Pras Subramanian reports that several users on X claimed they were able to hail and ride some of the 10-20 Tesla Model Y vehicles available, which featured "Robotaxi" graphics on the sides of the cars.
Tesla CEO Elon Musk had announced the rollout on X earlier in the day, saying that customers will pay a flat $4.20 fee. Only select invited Tesla users were invited to test the robotaxi service, as it begins to scale to take on industry leader Waymo (GOOG, GOOGL).
Wedbush analyst and Tesla bull Dan Ives wrote in a note: 'We took two approximately 15 minute rides around Austin and the key takeaways are that it was a comfortable, safe, and personalized experience.'
Read more here.
US stocks wavered on Monday as oil trimmed gains and supply worries eased over Iran's possible retaliatory move following US strikes on the country's nuclear facilities.
The Dow Jones Industrial Average (^DJI) fell slightly while the S&P 500 (^GSPC) was little changed. The tech-heavy Nasdaq (^IXIC) fell slightly.
OIl futures were little changed after spiking more than 5% on Sunday night as traders assessed whether Iran would close off the Strait of Hormuz, a critical chokepoint through which roughly 20% of the world's oil products flow.
Trump Media & Technology (DJT) stock rose 4% before the market opened Monday morning after the company announced a $400 million stock buyback.
Shares of the company — in which President Trump is the majority stakeholder — have fallen roughly 48% in 2025.
Stock buybacks, a common practice that faces a fair share of criticism, reduce the amount of a company's common shares in the public market and, hence, boost its earnings per share even if its profits don't rise.
Trump Media said the buybacks 'would be funded separately from, and would not alter, Trump Media's previously announced Bitcoin treasury strategy.' The company is aiming to create a bitcoin treasury to hold the cryptocurrency on its balance sheet and announced a $2.5 billion private funding round to fund the initiative in May.
Trump Media is part of a wave of firms following in the footsteps of crypto tycoon Michael Saylor's company, Strategy (MSTR), which has seen its stock soar by buying up bitcoin.
Wedbush analyst Dan Ives wrote in a note to clients on Monday that he expects cybersecurity stocks to be in focus following the US bombing of three Iranian nuclear facilities over the weekend.
Ives wrote that 'cyber security stocks in particular [are] set to be front and center this week as investors anticipate some cyber attacks from Iran could be on the horizon as retaliation.'
'On the cyber security sector, our favorite names remain Palo Alto (PANW), Cyberark (CYBR), Crowdstrike (CRWD), Zscaler (ZS), and Checkpoint (CHKP)."
The stocks traded roughly flat premarket on Monday.
Defense stocks were modestly higher Monday during premarket trading after the US bombed three Iranian nuclear facilities over the weekend.
Palantir (PLTR), Lockheed Martin (LMT), and Northrop Grumman (NOC) rose less than 1%, while RTX (RTX) climbed 1.3%.
Palantir supplies AI-fueled defense tech to Israel, which has prompted blowback from former employees and protesters. The other three companies supply weapons to Israel through their contracts with the US government.
The defense stocks had jumped immediately after Israel's first airstrikes on Iran on June 12, but only RTX has sustained notable gains of 4% since those strikes. Lockheed Martin is up 0.3% over that time frame, while Northrop Grumman is roughly flat (up 0.1%). Palantir has risen 1.6%.
Jefferies (JEF) analyst Mohit Kumar wrote Monday, 'Market is now waiting to see how Iran reacts …​​However, we are not fully convinced around the market's sanguine reaction.'
'Defence has been one area that we have been bullish on, and we continue to maintain our overweight exposure,' he added. 'NATO countries have moved to increase defense spending with a long term goal of taking to 5% of GDP. We are typically skeptical of long term goals as goal posts do change, but it is also clear to us that defense spending needs to increase globally and not just for NATO countries.'
Energy stocks rose alongside rising oil prices in premarket trading on Monday while overall stock futures wobbled. Those with oil production in the US and outside the Middle East caught a bid as investors weighed the possibility of further disruption to the oil supply following the US strikes on Iran.
The Energy Select Sector SPDR Fund (XLE) advanced 0.6% and has risen 6% in the past month.
Here's a look at how trending energy stocks are trading this morning:
View more trending tickers here.
Yahoo Finance's Jennifer Schonberger reports:
Read more here.
Economic data: Chicago Fed activity index (February); S&P Global US Manufacturing PMI (March preliminary); S&P Global US services PMI (March preliminary); S&P Global US Composite PMI (March preliminary)
Earnings: FactSet (FDS), KB Home (KBH)
Here are some of the biggest stories you may have missed overnight and early this morning:
Trump just made the Fed's rate call even more complicated
Opinion: Trump wages 2 wars — one with trade partners, one with Iran
Why Iran could hold off blocking the Strait of Hormuz
Oil erases spike in gains in wait for Iran's response
Morgan Stanley: Geopolitical selloffs tend to fade fast
Analysts react as markets brace for Iran's next move
Dollar advances as investors brace for Iran response to US attacks
BNY Mellon approached Northern Trust for merger: WSJ
Here are some top stocks trending on Yahoo Finance in premarket trading:
Tesla (TSLA) stock rose over 1% in premarket trading after rolling out its driverless taxi service to riders on Sunday. The debut of the robotaxi was introduced to a handful of riders, which included retail investors and social-media influencers in Tesla's hometown of Austin.
Wolfspeed (WOLF) stock fell 11% in premarket trading on Monday after announcing it plans to file for bankruptcy in the US under a new restructuring agreement with its creditors. The agreement would provide fresh financing and slash debt by nearly 70%.
Northern Trust Corporation (NTRS) shares rose 4% before the bell after a report from The Wall Street Journal said that Bank of New York Mellon Corp had reached out to the asset and wealth manager and expressed interest in a merger.
Most investors will awaken today searching online for "Strait of Hormuz" after the weekend attacks from the US on Iran. For speed of analysis purposes, if this key oil shipping hub closes down (seems like it won't happen, based on everything I am seeing this morning), it could really send oil (CL=F, BZ=F) prices skyrocketing.
Here's what Goldman's team estimates:
"If oil flows through the Strait of Hormuz were to drop by 50% for one month and then were to remain down 10% for another 11 months, we estimate that Brent would briefly jump to a peak of around $110."
Read more here on Goldman's scenarios.
Gold pushed higher with the world in limbo as the US joined Israel's attack on Iran over the weekend. No formal response has been issued by Iran, with wider fallout expected.
Spot gold climbed 0.2% to $3,375.04 an ounce taking it to within $125 of its record high as investors sought safe-haven assets in a tumultuous economic situation.
Gold then sank 0.5% despite broader haven demand.
Bloomberg reports:
Read more here.
Wall Street is closely watching escalating tensions in the Middle East after President Trump confirmed that the US launched a surprise strike on Iran's nuclear sites late Saturday, marking the country's official entry into the two-week-old conflict.
Markets have held mostly steady in the aftermath of the escalation, although US stock futures fell across the board when trading opened Sunday evening.
Additionally, bitcoin (BTC-USD) prices, often viewed as a barometer of risk appetite, dropped over 1.6% to trade around $100,500 a coin. WTI crude (CL=F) and Brent (BZ=F) futures jumped, trading near $76 and $79 a barrel, respectively, as uncertainty looms over the potential closure of the critical Strait of Hormuz despite ongoing threats from Iran.
The latest surge follows oil's third consecutive week of gains on Friday.
"We wouldn't be surprised to see this spark a risk-off reaction in US equities and will be watching the futures closely on Sunday evening and Monday morning," Lori Calvasina, head of US equity strategy research at RBC Capital Markets, wrote in a Sunday evening note to clients.
"It has been and remains our belief that the longer and broader the conflict becomes, the more challenging it could be for US equities," Calvasina added. "These escalations come at a tricky time for US equities, as the S&P 500 has looked fairly valued to us (perhaps a bit overvalued) from a fundamental perspective, with more room to run from a sentiment perspective."
The analyst said her three main concerns include: first, the risk that rising national security uncertainty could weigh on equity valuations; second, the possibility that renewed geopolitical tensions could stall the recovery in sentiment that began after the early April tariff lows; and third, the potential for a spike in oil prices, which could fuel inflation concerns.
In terms of sectors, Energy (XLE) tends to outperform when oil prices rise, while Consumer Discretionary (XLY) and Communication Services (XLC), along with Entertainment, Media, and Interactive Media, tend to lag behind the broader market, Calvasina noted.
Citi analyst Stuart Kaiser agreed that sharply higher oil prices remain "the channel for geopolitical risks to impact stock markets," identifying crude prices "well above $80 a barrel" as a critical threshold for concern.
Kaiser added that options markets are now pricing in a 10% chance that oil surges 20% over the next month, up from just 2.5% two weeks ago, reflecting mounting tail risks as the conflict deepens.
Still, the analyst pointed to resiliency in stocks amid the volatility, saying, "Markets powered through extreme oil volatility and unstable geopolitical headlines to post a risk-on week."