Shocks and Stocks

The attack on Israel generated a global reaction of shock, disdain, and compassion. Secondarily, investors wondered how this regional conflagration might affect the global economy in general and stocks in particular. Since WWII, selected military shocks resulted in average declines for the S&P 500 one, seven, and 30 days after the event, as a result of the initial surprise and uncertainty. Stocks then recovered 60 days and beyond, after realizing that the fallout from most events would be localized.