In the Markets Now: Iran Conflict (Week 3)

Mike Antonelli: Ross, it’s been about 19 days since the conflict with Iran started and although we’ve each given our thoughts on the matter already, there have been a few changes to the situation that we should address. Oil prices remain stubbornly high ($99 a barrel, up from $65 pre-conflict) as the Strait of Hormuz closed and hopes for a quick resolution are fading. Oil (and therefore gas price inflation) is the one thing that continues to bother stocks the most. Yet as I look at the S&P 500, it’s down by less than 3% since this all began. Has your view on the impact of this event changed recently?   

Ross Mayfield: Not overall, no. We’ve looked at a lot of geopolitical events across recent U.S. history, and far more often than not, the stock market was higher 6- and 12-months later (and the U.S. is far less sensitive to energy shocks than it was in the past due to increased domestic production). Now, the longer the conflict drags on – particularly if the Strait of Hormuz remains functionally closed – the higher the odds that spiking gas prices could negatively impact consumer spending and corporate profits (nullifying much of the hoped-for boost from tax refunds). But I think the market’s resilience here is a sign of two things: 1) The underlying fundamentals of U.S. companies are still pretty strong (for example, a couple of airlines this week actually raised their sales guidance for the coming quarter) and 2) Investors expect that the Trump administration will want a resolution as quickly as possible in a midterm election year. How are you thinking about things right now?

Mike Antonelli: I keep coming back to the thought that history is FULL of events like these and investors that remained calm, stuck to their plan, and trusted the team that manages their money stayed on track.  Yes, it could get worse. Yes, oil prices could surge causing an inflation spike. Yes, the stock market could fall further. But that’s how it’s always been? Every year since the dawn of humanity has been full of uncertainty yet look how far we’ve come. That being said, I am sure of one thing: this conflict will end one day. Do you want to look back on this period and say “I made a financial decision I regret” or do you want to implement the lessons of one hundred years of investing behavior?

Ross Mayfield: I think that’s a good way to look at it. As we sit here right around the six-year anniversary of the Covid-19 bear market, I think a few of the main takeaways from the pandemic apply here, too. First, stock markets almost always bottom earlier than it feels like they should, and once they start rallying, they rarely give those that sold a chance to get back in. Markets are forward-looking machines and don’t always reflect what’s in the news or what’s happening in the economy. Instead they trade on, “Are things getting better or worse?” Second, companies are more flexible than we give them credit for. They navigated the tariff shock last year and turned in record profits.

Look, the market could fall further from here and still be easily within the realm of “normal” trading action (the average intrayear drawdown since 1950 is -14%), but we also know that a long-term mindset and steady hand have been rewarded in past crises. We’ll continue to monitor the situation closely. In the meantime, we remind our readers to reach out to their Baird Financial Advisor with any questions related to their own circumstances.

Disclosures

This is not a complete analysis of every material fact regarding any company, industry or security. The opinions expressed here reflect our judgment at this date and are subject to change. The information has been obtained from sources we consider to be reliable, but we cannot guarantee the accuracy. Market and economic statistics, unless otherwise cited, are from data provider FactSet.

This report does not provide recipients with information or advice that is sufficient on which to base an investment decision.  This report does not take into account the specific investment objectives, financial situation, or need of any particular client and may not be suitable for all types of investors. Recipients should not consider the contents of this report as a single factor in making an investment decision. Additional fundamental and other analyses would be required to make an investment decision about any individual security identified in this report.

For investment advice specific to your situation, or for additional information, please contact your Baird Financial Advisor and/or your tax or legal advisor.

Past performance is not indicative of future results and diversification does not ensure a profit or protect against loss. All investments carry some level of risk, including loss of principal. An investment cannot be made directly in an index.

Copyright 2026 Robert W. Baird & Co. Incorporated.

Other Disclosures

UK disclosure requirements for the purpose of distributing this research into the UK and other countries for which Robert W. Baird Limited holds an ISD passport.

This report is for distribution into the United Kingdom only to persons who fall within Article 19 or Article 49(2) of the Financial Services and Markets Act 2000 (financial promotion) order 2001 being persons who are investment professionals and may not be distributed to private clients.  Issued in the United Kingdom by Robert W. Baird Limited, which has an office at Finsbury Circus House, 15 Finsbury Circus, London EC2M 7EB, and is a company authorized and regulated by the Financial Conduct Authority.  For the purposes of the Financial Conduct Authority requirements, this investment research report is classified as objective. 

Robert W. Baird Limited ("RWBL") is exempt from the requirement to hold an Australian financial services license.  RWBL is regulated by the Financial Conduct Authority ("FCA") under UK laws and those laws may differ from Australian laws.  This document has been prepared in accordance with FCA requirements and not Australian laws.