Stock Responses to Global Political Occurrences: An Examination of the 'Nothing Ever Happens' Stock Market

In the world of finance, Kiplinger Personal Finance Magazine serves as a trusted source of advice and guidance for investors. On a tumultuous day in June 2025, the global economy felt the ripples of unrest in the Middle East, and Kiplinger's readers were not immune to the market's volatility.

The attack on Iran's nuclear facilities by Israel on June 13, 2025, caused immediate concerns about a potential wider conflict and the possible blockade of the Strait of Hormuz. This uncertainty sent oil prices soaring, benefiting energy companies, while gold prices also rose sharply as a safe haven, boosting gold miners and related companies. However, US stocks were unsettled by the geopolitical tensions and trade concerns, leading to losses in some sectors, particularly those sensitive to global instability and dollar weakness.

The S&P 500 index dropped by 1.1% on June 13, 2025, with notable losses in the travel and leisure sector. Companies like United Airlines (UAL), Delta Air Lines (DAL), Expedia Group (EXPE), Marriott International (MAR), and Norwegian Cruise Line Holdings (NCLH) and Carnival Corp. (CCL) each fell at least 3%. Interestingly, seven of these ten companies managed to recover and gained at least 7% from June 13 to the end of the month in 2025.

The instability in the Middle East had been a concern for some analysts, with the Wells Fargo Investment Institute recommending an overweight position in commodities this year to take advantage of any further conflict. Chris Haverland, a global equity strategist at Wells Fargo Investment Institute, also suggested that quality large-company stocks were preferable over small caps.

However, Matt Gertken, of BCA Research, revised his assessment of the Middle East situation, reducing the probability of a major oil shock from 60% to 25%. Gertken also increased the probability of no geopolitical impact on oil from the current events to 25%.

In the face of geopolitical events, Haverland emphasised diversification as the best defense. The Wells Fargo Investment Institute further recommended more commodity exposure in portfolios, including both energy and precious metals.

As markets typically recover from geopolitical events quickly, according to market historian Sam Stovall, investors may find solace in the fact that the market has a history of resilience. For those seeking further guidance on navigating political uncertainty, related content such as "Here's My Investing Playbook For Political Uncertainty", "The Riskiest S&P 500 Stocks Right Now", and "Three Keys To Logical Investing When Markets Are Volatile" may prove useful.

In the days following the attack, Halliburton (HAL) rose 6% on June 13, 2025, but fell 12% by June 30, 2025, highlighting the unpredictability of the market even in times of crisis. As always, it is crucial for investors to stay informed and adapt their strategies accordingly.