Venezuela, Greenland and now Iran – 2026 has been marred with geopolitical instability , but some on Wall Street think investors aren't as concerned as they should be about the latest conflict. In the beginning of the year, when the U.S. conducted a military operation in Venezuela that involved capturing and ousting that country's leader, U.S equities didn't move much . Stocks also recovered from the developments around President Donald Trump 's push to control Greenland , as the S & P 500 closed out the first month of the year in positive territory. That was no different last Monday – the first trading day after the U.S. and Israel launched strikes on Iran last weekend. The S & P 500 came off its lows to finish just above the flatline that day. The index also settled well off its lows on Thursday and Friday . At one point on Friday, when U.S. oil futures reached their highest level since 2023, the S & P 500 was off 1.7%. The index ultimately ended the session down 1.3%. .SPX 5D mountain The S & P 500 in the past week "The initial investor reaction to this war has been very tame," said Jed Ellerbroek, portfolio manager at Argent Capital Management. "Investors learn really, really quickly, and we've seen Trump in … a lot of times just in the last 13 months make the really extreme, maximalist demands, and then settle for something much more reasonable. I think investors are assuming that happens here as well." There were some risk-off movements last week, to be sure – the CBOE Volatility Index rose above 29, the U.S. dollar index saw a weekly gain and stocks ultimately finished with weekly losses. In all, the S & P 500 fell 2% last week, but it is still only less than 4% from its recent high. Stocks would have posted much larger weekly losses than they did if investors weren't betting that the war will be short-lived, Ellerbroek said. That's even after Trump said last week that while he expects the war with Iran to last four to five weeks, it could go on " far longer than that ." "If investors believed this was a three-month thing, I think the stock market would be a lot lower," Ellerbroek said. The market tends to reorient away from events that don't "resolve quickly" or that don't bring about a "major persistent impact," said Baird investment strategist Ross Mayfield, who cited the Russian invasion of Ukraine in 2022 as one example the market eventually moved on from. He fears that the flooding of the zone — in this case, the rapid influx of geopolitical developments — that's been seen this year could lead investors astray with how they view other potential events in the future, such as those related to tensions between China and Taiwan. "There are so many geopolitical events and so few do end up having long-term impact on the market that it could build a little bit of complacency in the investor base," Mayfield said. "The more people are rewarded for buying these mini dips, it just makes the one-in-a-decade big thing a little riskier for folks." Eyes on energy All of that could change with the Iran war if oil prices top $100 per barrel, according to CFRA Research chief investment strategist Sam Stovall. On Friday, U.S. oil prices broke above $90 a barrel , placing its weekly rise at 35% — its biggest advance since 1983. Some have projected that oil hitting $100 a barrel – a move that was last seen after Russia's invasion of Ukraine – could lead to a global recession . "It's a fundamental as well as a sentiment level, above which investors, I think, would think we're heading for something worse," Stovall told CNBC. @CL.1 @LCO.1 5D mountain WTI crude vs. Brent crude prices, 5-day If oil doesn't reach that threshold, Stovall said he thinks the Iran war could turn out to be what he views as a "ping-pong-ball event," in which the conflict is something the market would "have to contend with, but we'll get around it." A key factor in determining that outcome would be the war's impact on energy infrastructure, which has been "relatively limited," said Matthew Aks, senior strategist of international political affairs and public policy at Evercore ISI. If a series of events led to permanent structural damage – such as the Iranians putting sea mines in the Strait of Hormuz – investors' concerns would surely be heightened as a result, he believes. "Most of what's happened so far, at least when it comes to energy, is still quite reversible when things settle down," Aks said. "That'd be the threshold that I watch going forward." Navigating Trump's moves Because of the uncertainty surrounding the conflict , Marko Papic of BCA Research cautions investors to "stay nimble" and be ready to take profits given the volatility the situation poses. While Trump said Friday that there wouldn't be a deal to end the war without an "UNCONDITIONAL SURRENDER" from Iran , the chief strategist said he thinks Trump utilizing an off-ramp is still in play. "Judging by President Trump's past behavior and negotiations and judging by the massive material constraints that the interdiction of shipping through Hormuz would impose on the U.S. economy/markets and thus his legacy, I do believe that President Trump will look to de-escalate much faster than most believe," Papic said. He added that Trump could be able to claim within a number of days that the mission in Iran is complete, say if the U.S. were to erode Tehran's nuclear program and ballistic missile capabilities. However, it's possible the president's own tactics don't work as expected, said the strategist, who is long on Brent crude , the iShares U.S. Oil Equipment & Services ETF (IEZ) and the Breakwave Tanker Shipping ETF (BWET) . "President Trump is not dealing here with Canada or China in trade negotiations, or Denmark in a geopolitical confrontation," Papic said. "He is dealing with a regime that has fought wars and that is backed up against the wall. As such, it is becoming difficult to forecast and handicap Iran." The conflict could unfold over a matter of weeks or months, said Dryden Pence, chief investment officer at Pence Capital Management. For that reason, he's watching defense stocks, including RTX , Lockheed Martin and Northrop Grumman . Those stocks have jumped between 2.1% and 4.4% in the past week. "Every time we fire one of these rockets or missiles, or every time our defense system goes off, that's just something that we've got to pay to replace," he said to CNBC. "I don't think the bombing stops anytime soon."
