U.S. Struck Iran—But Stocks Barely Fell. Why?

The U.S. really struck Iran—swiftly and decisively—just days after Trump said he would make a decision within two weeks. It happened over the weekend and wrapped up within hours.

Investors had been jittery about a possible escalation involving the U.S., and stocks traded cautiously over the past week. Naturally, many were concerned about how markets would react when they reopened on Monday.

But to my surprise, U.S. futures were down less than 1%—a move well within normal trading ranges. In other words, this was treated as a non-event.

Why the muted reaction?

1. Risk Already Priced In
Markets had likely priced in the possibility of a strike. The event didn’t come as a surprise, so the actual impact was minimal. When expectations are already baked into prices, the actual event often produces a smaller move than people fear.

2. Limited Scope of the Strike
The attack targeted only three nuclear sites—no military bases, no oil facilities. Even oil prices, which initially spiked 4%, have now settled at just over 2% gains. Iran’s parliament may have approved closing the Strait of Hormuz, a key oil shipping route, but the Supreme National Security Council hasn’t acted on it yet. Ships are still passing through—traffic has declined, but not stopped.

Historically, equity markets only react strongly when oil supply is materially disrupted—think millions of barrels per day for weeks, not just short-term fears.

3. Market Timing and Liquidity
Some might point out that the strike occurred during Asian trading hours, when liquidity is lower. U.S. markets were closed, and Asian market moves might not fully reflect global sentiment. That’s fair—we’ll get a clearer picture when Europe and the U.S. open later.

Of course, things can still escalate. Iran’s response, along with any follow-up from the U.S. or Israel, will shape what happens next. But a contained conflict remains the higher-probability outcome, not a regional war.

Even if markets react negatively in the short term, history tells us that markets often rebound quickly from geopolitical shocks—unless they damage global economic fundamentals.

So don’t let the headlines rattle you. Stay calm. Stay invested.