The stock market has shaken off its jitters over Iran, but analysts say investors could still be in for a bumpy ride this year. 

Stocks are back near records, a sharp turnaround after Iran’s missile attacks sent futures tumbling Tuesday evening. Major averages rebounded midweek after President Donald Trump said the U.S. doesn’t seek a war with Tehran.

As investing pros looked ahead at the end of last year, they saw a 2020 full of uncertainty – something investors hate –  because of trade tensions with China and a presidential election in the U.S.. Now hostilities with Iran have thrown another unsettling element into the mix. 

“Investors have to stay the course because it will likely be a volatile year,” says Ephie Coumanakos, co-founder and managing partner of Concord Financial Group.

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Investors are turning their attention to a series of events this week that could serve as the next catalysts for volatility. A “Phase 1” trade accord with China is expected to be signed, but the two sides haven’t finalized a deal yet.

Earnings season, meanwhile, kicks off with several large banks like JPMorgan Chase, Wells Fargo and Citigroup reporting financial results. The conflict with Iran will likely have little impact on companies’ bottom lines, but corporations will need to show profit growth to justify high stock valuations, analysts say. 

Investors braced for trade and political uncertainty in 2020, from a presidential election to trade negotiations with China. Now strains with Iran have thrown a wild card into the mix.

What Iran tensions mean for stocks

Tensions with Iran haven’t set off alarm bells just yet. A closely watched “fear gauge,” known as the VIX, was little changed Friday after falling for four consecutive trading sessions, a sign that investors remain calm.

But geopolitical concerns could return, analysts caution. The U.S. hit Iran with new sanctions Friday after President Donald Trump sought to de-escalate hostilities earlier in the week. 


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