What the Iran/U.S. Ceasefire Could Mean for Investors
This episode of the Fastest Four was recorded April 8. We recognized situations like this are ever-changing, but the importance of having a long-term plan stays the same.
Earlier this week, President Trump announced a preliminary ceasefire agreement between the US and Iran that is currently supporting negotiations to end the conflict in the Gulf.
Why the Strait of Hormuz Matters to the Global Economy
Beyond the impact of the war costing human lives and the threat of nuclear weapons, the biggest global economic threat the war has created is the shutdown of oil transport through the Straight of Hormuz. Iran announced that, as part of the ceasefire, passage through the Straight will be allowed if vessels coordinate with its armed forces.
How Markets Reacted: Stocks Surge, Oil Crashes
The stock market reacted to the ceasefire by surging. The S&P 500 Index surged more than 2% at the time of this recording. Oil prices, on the other hand, plummeted more than 15% at last check.
Why It’s Too Early to Call an All-Clear on the Iran Conflict
It’s important to remember our motto that things are never as good or as bad as they may seem. Our Chief Investment Officer Andrew Beatty writes “We think it’s too early to declare a certain end, but this is a large move in the positive direction. If we have learned anything about the President’s negotiating approach, there is a lot of back and forth so it would be surprising to see this as one-way traffic to an all-clear. But he says, if we are in fact on the road to resolution, this weakens the case for rampant inflation, makes the Fed’s job easier as we transition to Chair Warsh and can reinstate the thesis behind easing interest rates in 2026.”
Why Fear Is Keeping Americans Out of the Market
The earnings outlook may also be creating an opportunistic backdrop to the global unrest. Last week, we talked about an Allianz survey conducted in February that found a majority of Americans say they need to accumulate more money to retire, but are too nervous to invest in the market.
Why Corporate Earnings Drive Long-Term Stock Market Returns
We can’t let fear drive our investment decisions. Long term, the stock market is driven by corporate earnings. In other words, if public companies are making money, their stocks are attractive to investors. LPL Research makes the case that stock valuations are actually attractive right now.
Why Stock Valuations and 2026 Earnings Estimates Look Promising
Without getting into the weeds, the Research blog post makes two points to that end. First, the pullback due to the conflict in Iran puts valuations in a more attractive spot. Second, earnings estimates are moving higher. The current estimate is 2% higher than the month before. Estimates are putting 2026 earnings growth at 18%. That would be a reason to believe stocks would move higher.
The Case for Having a Long-Term Investment Plan
Navigating global uncertainty, market volatility, and your own emotions when investing can be tough. Having a long-term plan and working with an advisor who provides a collaborative voice can counteract your negativity and help you reach your long-term goals.
* Andrew Beatty, of LPL Financial, consults with GenWealth as their Chief Investment Officer.
Securities are offered through LPL Financial, Member FINRA/SIPC. GenWealth Financial Advisors is an other business name of Independent Advisor Alliance, LLC. All investment advice is offered through Independent Advisor Alliance, LLC, a registered investment adviser. Independent Advisor Alliance, LLC is a separate entity from LPL Financial.
