Tensions With Iran Weighs On Stocks

Tensions with Iran weighed on stocks.

But the markets also saw some typical profit taking after the spectacular Q4 rally last year, not to mention the early gains in January. So I wouldn?t read too much into this.

Near-term support for the S&P comes in at 3,205.48 (which is a gap left on the chart from 12/19/19), and then 3,182.68 (another gap from 12/13/19). But that's only a decline of -0.98% to the first support level, or -1.68% to the second level.

But I'd be a buyer on a dip. And quite frankly, I'd be a buyer on strength as well. Because the economy looks as strong as ever.

That was underscored by yesterday's ISM Non-Manufacturing Index coming in better than expected at 55.0 vs. last month's 53.9 and views for 54.5.

But it should be noted that late yesterday afternoon, it was reported that multiple missiles were fired from Iran at U.S. forces in Iraq. Iran has threatened retaliation after the U.S. killed terror chief Gen. Soleimani last week.

While an escalation in tensions is never good for the market, it should have little impact on the fundamentals of U.S. equities, and oil for that matter, given our new energy independence. But there's no denying the potential for a psychological impact.

Traders will be watching to see how things develop.

Interestingly, the administration will brief the Senate today regarding events with Iran. This, of course, will cover last week's operation. But it will now likely cover yesterday's attack as well.

In the meantime, investors should keep their eyes on the big picture.

Because 2020 looks like it could be even better for the economy and the markets.

See you tomorrow,

Kevin Matras

Executive Vice President, Zacks Investment Research

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