In the aftermath of the U.S. and Israel’s coordinated strike on Iranian nuclear sites, a move that many fear could escalate into broader regional conflict, the stock market has remained remarkably steady. Investors might be surprised by this reaction, especially given the gravity of the headlines. Yet history tells us this kind of market behavior is far from unusual.

When geopolitical tensions rise, it’s easy to let emotions take over. But it’s critical to remember that successful long-term investing isn’t about reacting to headlines, it’s about sticking to a disciplined plan. Even major global events, including military conflicts, rarely have a lasting impact on financial markets. Here’s why.

Geopolitical Conflict and Market Reaction: History Tells the Story

We often remind clients that short-term market moves are driven more by economic fundamentals, like interest rates, earnings, and consumer behavior, than by geopolitical events.

Take the start of the Russia-Ukraine war in 2022. Markets did react briefly, but that volatility was short-lived. Within weeks, the S&P 500 stabilized, and over the following year, it even posted gains. Why? Because markets are forward-looking and tend to price in risks quickly. Once investors assess the potential economic fallout, and find it manageable, they adjust and move on.

The same is happening now. Despite a major U.S. military operation against Iran over the weekend. On Monday, all major U.S. stock indexes – S&P 500, NASDAQ, and Dow Jones Industrial Average all ended the day higher. Oil prices, a potential pressure point, barely moved, with U.S. crude even slipping slightly.

While fear of escalation is real, markets are seeing limited disruption to oil supply, muted global response, and Iran’s relative isolation. That’s why the financial markets, so far, have remained calm.

Emotions Are Powerful, But They Shouldn’t Drive Investment Decisions

When it feels like the world is on the brink, it’s tempting to make reactive financial decisions, like selling stocks, going to cash, or changing your long-term plan. But this is where having a fiduciary financial advisor and taking a step back to look at your entire financial picture can make all the difference.

Here’s what history and experience has taught us:

• Emotional decisions lead to poor timing. Investors who sold at the start of COVID-19 or during the initial shock of the Ukraine invasion often missed the subsequent recoveries.
• Market timing is a losing game. You need to be right twice—when to get out and when to get back in. Even professionals rarely get it right.
• Staying invested wins. Over decades, markets have recovered from every conflict, crisis, and shock. Long-term investors have always been rewarded for staying the course.

What Markets Do Care About: The Bigger Picture

While war grabs headlines, markets tend to care more about:

• Interest rates: Recent comments from Federal Reserve officials suggest a potential rate cut in July or September, which has buoyed investor sentiment.
• Inflation: Oil prices remain in check for now. Even if the Strait of Hormuz were closed, global oil reserves and diversified supply chains offer buffers.
• Economic growth: Despite geopolitical tensions, the U.S. economy continues to show strength, echoing the resilience seen during past crises.

Markets understand this complexity, and they respond accordingly, not emotionally.

A Fiduciary Perspective: Stay Disciplined, Stay Invested

At Navalign, we believe in helping clients filter out the noise and focus on what they can control: their goals, their plan, and their behavior. That’s what fiduciary investment and financial planning services are all about—putting your interests first and guiding you through both calm and chaotic times.

When the news gets intense, ask yourself:

• Has my time horizon changed?
• Has my risk tolerance changed?
• Have my goals changed?

If the answer to these is no, then your investment strategy probably shouldn’t change either.

Peace of Mind Comes from Planning, Not Predicting

Markets don’t ignore war, but they do weigh it carefully. And when the economic impact appears limited, as it does now, they often move on quickly. As a long-term investor, you should too. The key isn’t to outguess global politics—it’s to have a plan that can withstand them.

Let’s talk about how to build a plan that keeps you on track, no matter what’s in the headlines.