Does the Bear Market Start Today?
Last week, markets did not expect the escalating conflict between Israel and Iran. The uncertainty will worsen as markets worry about the U.S. getting involved. Is this the start of a bear market?
Iran might have nuclear sites that are deep beneath the surface. Bunker-buster bombs might have the capability of destroying it.
Oil prices will continue to surge in response. For the last year, WTI crude prices trended lower, falling from $80 to below $60 in May. Prices strengthened to $76.00 late Thursday evening. This will also lift energy stocks, such as Occidental Petroleum (OXY), Energy Transfer (ET), Shell (SHEL), and Exxon Mobil (XOM).
Gold prices will also strengthen. Still, the Gold Shares ETF (GLD) indicated a bearish multiple top at around $315. Should tensions in the Middle East ease, gold prices would weaken. Conversely, bitcoin (BTC-USD) prices would resume its uptrend, heading above $105,000.
Federal Reserve on Pause
In Friday morning trade, stocks might underperform as President Trump criticized Fed Chair Powell for pausing interest rate cuts. He said that the decision would cost the U.S. hundreds of billions of dollars. Ultimately, the bond market decides what interest rate levels should be. Treasury yields did not move by much after the decision.
Bank stocks moved higher on Wednesday. Wells Fargo (WFC) and asset manager Blackrock (BLK) rose. When markets expect the economy to thrive, investors buy companies in the financial sector.
Your Takeaway
The market is not entering a bear phase. It will continue to react to war uncertainty, heightening stock volatility.
