If nothing else, the image of Wall Street investors as extras from Oliver! was worth the price of admission

Following up on yesterday's post, here's Allison Morrow's actually informed take:

After more or less shrugging at the conflict Monday, stocks tumbled Tuesday, with the Dow down 1,200 before dip-buyers moved in. The Dow ended the day down 400 points, or 0.8%.  The S&P 500, which had been down 2.5% ended down 0.9%. The Nasdaq fell just over 1%.

 

Part of the problem for investors is the Trump administration’s murky timeline. Defense Secretary Pete Hegseth on Monday declared that this conflict “is not endless” like the Iraq War. But he also refused to offer details about an exit strategy, telling reporters he “would never hang a time frame” on the operation. 

 

President Donald Trump initially floated four to five weeks, then added that “whatever the time is, it's OK, whatever it takes.” Trump has also refused to rule out a boots-on-the-ground invasion. 

 

“The view of a short war been upended,” Thierry Wizman, global FX and rates strategist at Macquarie Group, said in a note.

 

Another problem for markets: Wars tend to be inflationary. (See: Oil prices surging as transit through the Strait of Hormuz has all but ground to a halt.) Higher inflation makes central banks less likely to cut interest rates, which means the prospect of the Fed doing two rate cuts this year is now in doubt. And that’s a certified bummer for investors who’ve been staring at the Fed's dot plot like a bunch of children Dickensian orphans eyeing a vat of porridge. Please, sir, may we have some more?

I don't believe the panic/denial cycle can go on forever. Eventually the markets are almost certain to run into news that can't be shrugged away. I 'm just nervous about what that news might look like.