Dear traders, dear stock market friends.
The attack by the USA and Israel on Iran at the weekend had already been announced in recent weeks and was therefore not entirely unexpected. The rising oil price and the (albeit short-term) downward pressure on the stock markets last Friday were also harbingers of a possible imminent military escalation. Whether the geopolitical uncertainty will only lead to a short-term dampening of sentiment or to a more significant correction in the S&P 500 in the coming weeks is still unclear at present. The S&P 500 future opened the night from Sunday to Monday down around one percent.
Geopolitics often leaves stock markets untouched (but not always)
Geopolitical tensions or military conflicts are often more severe on the stock market in the initial reaction than in the medium term. Historically, large equity indices have often shown an astonishing ability to digest such events, especially when growth and liquidity do not collapse at the same time. Even if lasting negative effects are unlikely, there may be noticeable short-term drawdowns. 
Some historical examples:
- Gulf War/Iraq-Kuwait (1990/91): Before the war began, uncertainty and oil prices rose and shares came under pressure. As the military situation became clearer and oil fell again, the markets recovered.
- Iraq war (2003): Here, too, uncertainty was high before the start; once the conflict started and some of the uncertainty left the market, shares stabilized or recovered.
- Russia/Ukraine (2022): The market initially reacted risk-off, but further developments depended heavily on energy prices, central bank reaction and growth expectations, i.e. again on macro factors.
The lesson: geopolitics alone is rarely a lasting bear market trigger. It becomes critical when it results in an oil/inflation shock or a credit/liquidity shock. This is precisely why the market is now looking so closely at oil and bonds.
Is an oil price shock imminent?
Oil generally reacts much more sensitively to military escalations than equities, as supply chains, risk premiums and transportation routes are directly involved. Oil prices already rose noticeably on Friday as nervousness surrounding Iran increased. 
With the attacks on 28.02.2026, the focus is now primarily on the Strait of Hormuz and the associated potential bottleneck for global oil transportation. The moment markets price in even a temporary disruption, the risk premium increases. 
At the same time, however, history also shows that oil spikes are often event-driven and often give way again as soon as
- the feared supply disruption does not materialize or
- an exit/de-escalation path becomes recognizable.
It was precisely this dynamic that could be observed in earlier phases of the Gulf conflict, for example, when oil fell again significantly after initial risk premiums. 
The development of the oil price is also very important for the S&P 500, because a prolonged rise in the oil price leads directly back to the topic of the Fed and interest rates via inflation expectations and consumer spending.
Light sweet crude oil futures opened last night with a gap of around 12%, but then fell again and were trading at a premium of around 7% on Monday morning compared to Friday's close.
S&P 500 Index trending sideways
At the end of the day, especially in situations like these, it is important for stock market traders to try not to get caught up in emotions or headline-driven scaremongering and to keep a sober view of the price action.
The S&P 500 has been moving in a sideways price range since the beginning of the year, with initial support in the area of the daily EMA 100 at 6800 points and further support at 6750 points. If this support zone does not hold, there is a risk of further price losses down to the 6550 - 6600 range. On the upside, the all-time highs in the 7000 point range represent resistance.
Escape to defensive sectors
The fact that investors on the stock market are currently shying away from risk and looking for security is a development that we have not just observed in the last week. Defensive market sectors have been performing significantly better since the beginning of the year:
- Consumer Staples (XLP): +15.9 %
- Utilities XLU: +11.8
- Healthcare XLV = + 3.5 %
Offensive sectors such as Technology (XLK), Consumer Discretionary (XLY) and Communication Services (XLC), on the other hand, are among the laggards in the current year.
Advance Decline Line signals continuation of trend
In contrast to the defensive signals from the sector rotation, an analysis of the market breadth reveals a very bullish picture. The Advance Decline Line (number of rising shares - number of falling shares) has risen significantly in recent weeks, while the S&P 500 Index has trended sideways.
Usually, such a clear strength of the market breadth or the AD line means that the stock market or the S&P 500 will follow the signal of the AD line and also break out to the upside. However, due to the defensive sector rotation and the current geopolitical escalation, caution is advised. If the S&P 500 is able to defend the above-mentioned support and at the same time risk appetite becomes apparent again (relative strength of the offensive market sectors), sentiment could brighten again quickly and the chances of a continuation of the bull market would increase significantly.
Author: Tobias Schmid
Date: 02.03.2026
