Excerpt from our One Page Annotated Wall Street Journal Summary (receive it by email every morning by signing up here):
MARKET MOVERS: Keeping Cool Amid Global Strife
Summary: Middle East fighting has almost never done long-term damage to the US stock market, except when economic fundamentals have been seriously damaged, usually a disruption in the supply of oil. The market tends to overreact to Middle East crises. Crude-oil futures hit $77.03 a barrel Friday, below the all-time inflation adjusted high of $98.58 in 1980 but 4x its 2001 level, partly on fears that Iran will be drawn into the current conflict. However, even if the Middle East conflict abates, concerns remain about US consumer spending, the housing market and global interest rates. More data will be available Thursday when The Federal Reserve releases a summary of its June meeting, and consumer price and housing starts data are released.
Comment on related stocks/ETFs: Geopolitical tensions are not the only factor propelling the price of oil and gasoline. See Three Factors Pushing Up the Price of Oil & Gasoline and Why Oil is Cheap at $75 a Barrel. Note also John Hussman's argument that the stock market has a good record predicting bad news, and it's currently issuing a tornado warning.