Over the past week, events in the Middle East have escalated and drawn global attention. Joint airstrikes targeting Iranian military installations are ongoing, aimed at slowing Iran’s nuclear development and weakening its military capabilities. The death of Iran’s Supreme Leader, Ayatollah Ali Khamenei, has added further uncertainty to the situation. Iran has responded with missile attacks directed toward Israel and several Gulf states, including Qatar, the United Arab Emirates, Bahrain, and Saudi Arabia.
These developments have created ripple effects across global markets, particularly in energy. Tanker traffic through the Strait of Hormuz — a passage responsible for roughly 20% of the world’s oil supply — has slowed, leading to a rise in oil and gas prices. At this point, our view is that a sustained spike in energy prices would likely require a longer-lasting disruption than what we are currently seeing.
While the headlines are serious, it is helpful to step back and view events like these through a historical lens. Markets have navigated many geopolitical conflicts over time. In most cases, once conditions stabilize, markets tend to recover relatively quickly—often within days or weeks—so long as the underlying economy remains healthy. Geopolitical events can increase short-term volatility, but they rarely change the long-term direction of markets unless they lead to a prolonged economic downturn.
Looking ahead, our broader outlook for 2026 remains constructive. The U.S. economy continues to grow, supported by fiscal stimulus from the One Big Beautiful Bill Act and ongoing investment in artificial intelligence. Corporate earnings remain strong—particularly in technology—with S&P 500 earnings per share growing 14% in the fourth quarter.
The Federal Reserve is also expected to begin cutting interest rates later this year as inflation pressures ease. Despite an initial reaction in the Treasury market following the Iran strikes, interest rates remain at levels that support economic activity. Mortgage rates dipped below 6% in February for the first time since 2022, which is encouraging for the housing market.
We recognize that periods like this can bring questions and uncertainty, and we want you to know that we are watching developments closely. Our role is to help guide your portfolio thoughtfully through both calm and turbulent environments while keeping your long-term goals at the center of every decision. Thank you, as always, for the trust you place in us. It is a responsibility we take seriously, and we are grateful for the opportunity to serve you and your family.
Finally, moments like this are also a reminder of the real human cost of conflict. Every loss of life carries deep weight, and war always impacts families and communities far beyond the battlefield. Our thoughts and prayers are with the service members and civilians who may find themselves in harm’s way. We pray for their protection, for the comfort of those affected by loss, and for wisdom among leaders as they work toward a more peaceful and stable future.
As always, please reach out to us with questions. Thank you for your continued trust.
Important Information
This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.
References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.
All data is provided as of October 1, 2025.
All index data from FactSet.
The Standard & Poor’s 500 Index (S&P500) is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
Past performance does not guarantee future results.
Asset allocation does not ensure a profit or protect against a loss.
This research material was prepared by LPL Financial, LLC.
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