It’s not exactly a secret that war can have a debilitating, caustic effect on the economy.
So when Operation Epic Fury commenced over the weekend — which saw joint U.S. and Israeli forces successfully kill Ayatollah Ali Khamenei, as well as much of Tehran’s leadership infrastructure — it was only logical for people to assume that the markets would have a volatile and negative weekend.
According to The Wall Street Journal, those wringing their hands were only half right.
The Middle East conflict lifted oil, and stocks rebounded from early declines Monday, with investors saying hostilities, if brief, are unlikely to severely hurt the economy. https://t.co/ZdDhCivC3c
— The Wall Street Journal (@WSJ) March 2, 2026
The outlet reported that “stocks initially fell and oil prices surged” in the first day following the conflict in the Middle East. But that was hardly the only shake-up.
Airline shares fell, while gold and defense contractor shares jumped.
Importantly, the dollar also climbed. However, one of the most notable changes?
“But a rally in energy and tech helped the S&P 500 notch its biggest intraday recovery since November, bouncing back from an early 1.2% drop to finish up less than 0.1%. Brent crude moderated an early double-digit surge to a 6.7% climb,” The Wall Street Journal reported.
On a more macro level, the Dow Jones fell 0.1 percent (around 73 points), while the Nasdaq added 0.4 percent.
“It’s hard to get a good market down,” one financial advisor told The Wall Street Journal.
While these are mostly positive developments, the outlet did warn that “over time, war hurts growth and spurs inflation.”
It added, “But a brief conflict is unlikely to outweigh other market dynamics. Stocks remain near records, even after a recent slump fueled by worries about the impact of artificial-intelligence technology on jobs and the economy.”
According to CNBC, three key factors have fueled the S&P’s surge, even amid the uncertainty of war.
The first factor involved U.S. oil prices that have come “off their highest levels of the session.” As with any Middle Eastern conflict, concerns about oil pricing surged following Operation Epic Fury.
The Wall Street Journal added that the price increase for oil on Monday “was well within the boundaries of recent history, helping reassure those worried that crude’s climb would bleed the economy.”
The second factor involved investors putting lots of money toward the tech sector, which many presume to be largely immune to the volatility of a wartime economy.
Finally, there was also the “history of equities largely shaking off past geopolitical conflicts.”
Factor everything together and it appears that President Donald Trump may have done something seldom seen in history: Fighting a war with a largely healthy, stable, and thriving stock market, at least for now.
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