Oil prices rise, but stocks rebound amid Mideast fighting

U.S. stocks closed a volatile day nearly flat even as oil prices remained higher after the United States and Israel attackedIran.

On Feb. 28, the U.S. and Israel began striking Iran in a campaign that killed the nation's supreme leader, Ayatollah Ali Khamenei, and dozens of top officials and hit more than 1,000 targets inside the country, President Donald Trump said. Iran has retaliated with strikes against U.S. military bases, Israel and other nations in the Middle East.

News of the strikes almost immediately pushed oil prices higher as investors weighed the disruption to oil supplies coming through the Strait of Hormuz, where roughly a fifth of the world’s oil shipments pass. Iran also supplies about 4% of global oil.

West Texas oil prices were last up 6.07%, or $4.07, to $71.09 per barrel.

The blue-chip Dow dipped 0.15%, or 73.14 points, to 48,904.78, while the broad S&P 500 added 0.04%, or 2.74 points, to 6,881.62. The tech-heavy Nasdaq gained 0.36%, or 80.646 points, to 22,748.857.

Some market analysts had predicted the initial knee-jerk slump in stock prices at the open would fade.

"Early polling suggests that voters are taking a 'wait and see' attitude on US attacks in the Middle East," said Stifel Chief Washington Policy Strategist Brian Gardner. "But a sustained increase in oil prices or other affordability metrics could begin to emerge, depending on length and details of the fighting."

Angelo Kourkafas, senior global strategist at Edward Jones, said in a note: "The duration and impact of the conflict are hard to predict, but focusing on the knowns can help provide perspective for investors. Over the past 15 years, various geopolitical shocks have led to short‑lived oil spikes and limited market impact. Oil prices tend to rise ahead of these events. Markets may have already priced in much of the risk, and prices could fade from here."

He also reminded investors that global oil market is in oversupply and the Trump administration is "strongly incentivized to avoid a sustained rise in oil prices heading into the November elections."

Lurking opportunity?

Some investors with strong stomachs went bargain-hunting, dipping back into the market despite possibly more near-term downside, market experts said.

"If there is a silver lining, it’s that these market disruptions often bring opportunity if you know where to look," said Jay Woods, chief market strategist at Freedom Capital Markets

Keeping a diversified portfolio could also help investors weather any volatility, said Adrian Helfert, chief investment officer of multi-asset strategies at Westwood.

"Staying invested has been the right call in every comparable event since 1990," he said. "Across five similar geopolitical shocks, equities were higher twelve months later in four out of five cases. Selling into the initial panic has historically been the most-costly decision an investor can make."

(Updated with new information.)

Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at [email protected] and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday.