Addressing the Investment Implications of U.S./Iran Tensions

After US drone strikes at a Baghdad airport Friday killed the general in charge of Iran's elite forces, speculation is swirling over whether the situation will escalate. In response, early Wednesday local time, Iran launched missile strikes on US bases in Iraq. There were no reported casualties, which some believe was intentional on Iran's part and opens the door to a climbdown in tensions. However, that is unknowable. Concern is palpable, which is understandable given the potential destruction and loss of life. But there is also significant speculation about what potential escalation may mean for stocks—with some fearing negative fallout. Yet markets are no stranger to geopolitical risks. For investors, knowing how markets typically respond to such events is critical for investment decision making.