The latest chapter of a long history of military conflict in the Middle East is currently unfolding in Iran.
The U.S. and Israel are striking targets in Iran in an attempt to destroy the country’s nuclear capabilities and deter its leadership from pursuing nuclear weapons. Meanwhile, Russia’s invasion of Ukraine is entering its fifth year with no end in sight.
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After crashing nearly 20% in the first year of the conflict, Ukraine’s GDP has yet to fully recover. The soaring costs of war coupled with severe economic sanctions from around the world have also weighed heavily on Russia’s economy as well.
Russia’s economic growth slowed to just 0.5% in 2025. U.S.-listed stocks such as Starbucks Corp. (ticker: SBUX), Exxon Mobil Corp. (XOM), McDonald’s Corp. (MCD) and British American Tobacco PLC (BTI) completely shut down their Russian operations after the Ukraine invasion began. Companies such as Honeywell International Inc. (HON), Nvidia Corp. (NVDA) and Amazon.com Inc. (AMZN) have also reportedly shut down or dialed back operations in the Middle East in 2026 as well.
The conflicts in Ukraine and the Middle East coupled with tensions between the U.S. and China surrounding Taiwan could have major implications for the global economy in 2026 and beyond. Military conflicts can impact international supply chains, inflation, food insecurity, energy supply, defense spending and even political elections.
In this period of heightened global conflict and uncertainty, here are some things investors should know about how markets tend to react to war and armed conflict:
— Stocks that fall in times of conflict.
— Stocks that can benefit from armed conflict.
— How war affects commodity prices.
— Stock market outlook.
Stocks That Fall in Times of Conflict
International travel and leisure stocks are often among the worst performers during times of conflict because people don’t want to run the risks of traveling in or near war zones. In the past three months, shares of Chinese casino operator Melco Resorts & Entertainment Ltd. (MLCO
) are down 30%, Booking Holdings Inc. (BKNG) shares are down 25% and Carnival Corp. & PLC (CCL) shares are down 18%.
In addition to travel stocks, U.S.-listed stocks with direct exposure to war-torn regions have also been pressured or delisted. In 2022, VanEck completely liquidated its VanEck Russia ETF (RSX) and VanEck Russia Small-Cap ETF (RSXJ) after U.S.-listed Russian stocks crashed and were halted or delisted. BlackRock did the same with its iShares MSCI Russia ETF (ERUS). Russian stocks Gazprom, Ozon and Yandex were ultimately delisted.
Considering how much global oil production is at risk in both Ukraine and Iran, oil prices have also spiked. Higher oil prices and fears over an economic slowdown have weighed on metals and mining stocks, packaging stocks and transportation and logistics stocks. Industries vulnerable to higher interest rates have also been hit. Shares of home mortgage and equity lender Rocket Companies Inc. (RKT) have underperformed since the beginning of the Iran conflict, along with Lennar Corp. (LEN) and other home builders.
U.S. semiconductor makers Nvidia and Advanced Micro Devices Inc. (AMD) rely on leading global chip foundry Taiwan Semiconductor Manufacturing Co. Ltd. (TSM) to produce their high-end chips. If TSMC’s production is ever disrupted by war, AMD and Nvidia’s share prices may follow Taiwan Semi’s stock price into the basement. In addition to TSMC, U.S.-listed Taiwanese stocks include semiconductor firms ASE Technology Holding Co. Ltd. (ASX) and United Microelectronics Corp. (UMC), as well as telecom stock Chunghwa Telecom Co. Ltd. (CHT).
Stocks That Can Benefit From Armed Conflict
Not surprisingly, leading defense stocks have performed relatively well in recent months. Year to date, the stock prices of defense giants Lockheed Martin Corp. (LMT) and Northrop Grumman Corp. (NOC) are up 28% and 19%, respectively, while the S&P 500 is down 7%.
Tech stocks with exposure to defense technology have also outperformed since the campaign against Iran began. The U.S. military relies on Palantir Technologies Inc. (PLTR) artificial intelligence for battlefield data analysis and military intelligence. Lumentum Holdings Inc. (LITE) supplies laser and sensor technology used for missile guidance, and its share price has nearly doubled year to date.
Likewise, higher oil prices could mean more profits and higher share prices for U.S. oil and gas companies, such as Targa Resources Corp. (TRGP), SLB N.V. (SLB) and Halliburton Co. (HAL).
[Read: 5 Best LNG Stocks to Buy in 2026]
How War Affects Commodity Prices
Outside of oil, war can have varying impacts on global commodity prices, depending on the regions involved. Russia and Ukraine are among the world’s largest exporters of food and other agricultural products, including wheat and corn.
There are also complicated interactions among different commodity prices that can be impacted by war. For example, cotton prices and oil prices are typically highly correlated. Oil prices also impact the cost of synthetic fibers, including spandex, polyester and nylon. Ukraine produces about half of the world’s sunflower oil, and Russia’s boreal forest is a major global supplier of lumber.
Israel is also a major global exporter of diamonds and electronic integrated circuits and other electronics components. Iran produces 85% to 90% of the world’s saffron.
David Russell, global head of market strategy at TradeStation Group, says supply disruption is the key factor to consider when it comes to war’s impact on commodity prices.
“Commodities react to global conflict when the crisis touches the commodity itself,” Russell says. “This was the case with oil and fertilizer in the Ukraine war and now again with the Iran conflict.”
Investors have historically purchased gold during times of conflict, and gold is commonly viewed as a safe-haven commodity during times of market volatility and uncertainty. Spot gold prices surpassed $5,500 per ounce in January, a new all-time high.
Some crypto investors have said the limited supply of Bitcoin makes it like digital gold and have argued that crypto should be a safe-haven investment and a hedge against inflation. In reality, Bitcoin prices have been highly correlated with stock prices, as investors seem to consider it a risky asset rather than a safe bet.
Stock Market Outlook
The good news for investors is that U.S. markets have mostly shrugged off geopolitical risks as investors focus on AI-driven productivity gains for American companies and a business-friendly Trump administration.
Paul Stanley, chief investment officer at Granite Bay Wealth Management, says the S&P 500 is currently in a holding pattern as investors watch closely to see how the Iran conflict plays out.
“The past month of market action is very consistent with a textbook correction, including a fast-paced decline driven by negative sentiment, negative headlines and a hyper focus on a single storyline, in this case the surge in oil prices,” Stanley says. “The stock market is apt to recover well before many of these economic and geopolitical issues are resolved.”
LPL Research recently looked at how the S&P 500 performed following 40 crisis events dating back to 1940, including the 2020 COVID-19 economic shutdown, the U.K.’s Brexit vote in 2016 and the collapse of Bear Stearns and Lehman Brothers during the global financial crisis in 2008. LPL found the S&P 500 typically has experienced a sharp sell-off on the day a crisis event occurs but then averaged a 3.1% overall return six months later.
Adam Bergman, founder of IRA Financial, says investors who are concerned about the impact global conflicts will have on their stock portfolio should buy hard assets.
“We’ve seen this before: In the late 1970s and early 1980s, when we had a period of high inflation, real estate and gold markets outperformed the traditional equity markets,” Bergman says. “The key to a successful and resilient retirement portfolio is exposure to alternative assets in order to take advantage of the power of diversification.”
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How Do Conflicts and War Affect Stocks? originally appeared on usnews.com
Update 03/30/26: This story was published at an earlier date and has been updated with new information.
