While there has been an abundance of media coverage surrounding the conflict with Iran and resulting spike in oil prices, at this time the impact on most financial markets remains limited. Using the S&P 500 as a broad market indicator, as of Friday, March 13th the index has only declined 3.12% for the year on a price basis, ignoring dividends. While the index oscillated in a fairly tight range between roughly -1.0% and +2.0% through January and February, it has declined 3.59% from its closing level of 6,878.88 on February 27th, the last market close before the conflict with Iran began on the final Saturday of February.
It is far too early to gauge the ultimate impact of the conflict with Iran or predict if/when oil prices will return to the pre-conflict levels. In general we expect to see volatility and some disruption in the markets continue in the short-term. The longer the conflict carries on and oil prices remain significantly elevated, the greater the risk to continued economic growth and corporate earnings that the markets ultimately weigh.
As we observed in 2025 from the tariff-related market turmoil and subsequent tariff pause announcement, conditions can change quickly and markets can react violently to the upside just as they do to the downside. From February 19th, 2025 to April 8th, 2025, the S&P 500 declined 18.8% using closing market values and as much as 21% using intraday highs and lows for the period. When a 90-day pause on the tariffs was announced late afternoon on April 9th, the market shot higher and closed up 9.51% for the day. This type of headline driven volatility is a near-term reminder that policy driven turmoil can change quickly and being overly reactive to such issues can quickly put investors on the wrong side of the market.
In times like these we like to remind our clients that we construct portfolios to participate in rising markets while weathering inevitable downturns, considering each client’s individual risk tolerance and understanding that markets have historically rewarded long-term investors.
We will continue to monitor the situation and communicate as needed. As always, we welcome your calls or emails if you have any questions or concerns.
Written by Tim Sittler, CFP®, CAIA