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Oil Surges 1.8% Amid Middle East Tensions, S&P Sells Off

Oil prices rise 1.8% amid Middle East tensions, driving market volatility and highlighting energy stocks as attractive investments.

By Barry Stearns

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4/18, 21:19 EDT
Corning Incorporated
Halliburton Company
Honeywell International Inc.
Marathon Petroleum Corporation
Phillips 66
Rockwell Automation, Inc.
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Key Takeaway

  • Brent oil surged 1.8% amid Middle East tensions, escalating concerns over supply disruptions and pushing oil prices up.
  • Market volatility spikes, with the S&P 500 selling off due to rising oil prices, inflation, and cautious economic outlooks.
  • Analysts see investment opportunities in AI-leveraged stocks like Corning and energy stocks such as Halliburton amidst market turbulence.

Oil Prices Surge Amid Middle East Tensions

Brent oil experienced a notable increase, rising 1.8% amid unconfirmed reports of explosions in Iran, Syria, and Iraq. This uptick in oil prices is part of a broader trend observed over the last few weeks, driven by escalating geopolitical tensions in the Middle East, including an unprecedented attack from Iran on Israel over the weekend and attacks on Russian energy infrastructure by Ukraine. These developments have heightened concerns over potential supply disruptions, contributing to the upward pressure on oil prices.

Market Volatility and Investor Sentiment

The recent geopolitical events have led to increased market volatility, with the S&P 500 experiencing a selloff partly attributed to the rising oil prices. This volatility is further compounded by higher-than-expected inflation readings, spiking long-term bond yields, and cautious remarks about the economy from JPMorgan Chase CEO Jamie Dimon. Chris Senyek, chief investment strategist at Wolfe Research, highlighted the impact of "rapidly rising geopolitical risks" on equity markets, suggesting a potential for increased volatility and near-term downward pressure on stocks. However, Senyek also noted the possibility of equity market gains, supported by first-quarter results and guidance, particularly from stocks leveraged to the artificial intelligence trade.

Investment Opportunities in Uncertain Times

Despite the market turbulence, some analysts see opportunities in specific sectors. Emily Bowersock Hill, CEO and founding partner of Bowersock Capital Partners, pointed to stocks like Corning, Honeywell, and Rockwell Automation as being highly leveraged to artificial intelligence but currently undervalued by the market. Additionally, energy stocks have been identified as compelling opportunities due to the ongoing fluctuations in oil prices, with Brent crude hovering around $85 a barrel, marking a nearly 20% increase this year. Analysts at Wolfe Research recommend energy services stocks, with Outperform ratings on companies like Halliburton, Phillips 66, and Marathon Petroleum. Irene Tunkel, chief U.S. equity strategist of BCA Research, also highlighted energy stocks as attractive investments, considering them a good hedge against inflation and geopolitical risks.