Iran War: Stocks sink to start the week as oil prices rise

• The primary focus for markets is the duration of the Middle East conflict and its impact on oil markets.
• Investors should avoid making rash changes to S&P 500 price targets based solely on short-term sentiment; long-term drivers are economic fundamentals and earnings growth.
• Key metrics to watch include institutional passive equity fund flows (which have taken a hit), sentiment data (AAII net bulls fell), and S&P 500 forward P/E valuations (still above long-term average).
• The energy sector tends to outperform with rising oil prices, but its valuation appeal is debated after recent gains. The healthcare sector (pharma, healthcare equipment/services) is seen as more compelling due to valuation appeal, resilience, and strong earnings revisions.

Lori Calvasina discusses the market's reaction to geopolitical uncertainty, particularly the Middle East conflict and rising oil prices. She advises a 'wait and see' approach, emphasizing that long-term market drivers like earnings growth and economic fundamentals remain key. While acknowledging short-term risks, she highlights the healthcare sector as a compelling opportunity.