Investors are increasingly bracing for a prolonged conflict in the Middle East as fresh U.S. and Iranian strikes keep hostilities active.
Market participants are shifting their focus from hopes of a swift diplomatic resolution to pricing in a "long grind," reflecting a growing acceptance that the geopolitical friction will persist well into the future.
The S&P 500 has so far defied the backdrop of the protracted U.S.-Iran conflict, rebounding from an initial dip to close above 7,000 for the first time since the war began.
The index has now reached record levels, signaling investor resilience.
However, the latest escalation suggests that this resilience may be tested as the conflict shows tangible effects on the U.S. consumer landscape and broader economic ripple effects.
While equities have remained buoyant, the underlying sentiment is cooling.