--- title: "The Iran conflict enters its fourth week: US stocks show a \"reverse U-shaped\" trend, and the worst moment has not yet arrived" type: "News" locale: "zh-HK" url: "https://longbridge.com/zh-HK/news/280120240.md" description: "The Iran conflict has entered its fourth week, and concerns about stagflation are intensifying, with the S&P 500 facing volatility and downside risks. Despite the resilience shown by the U.S. market, rising credit pressures and hedging demands indicate a defensive strategy. The surge in energy prices may force the Federal Reserve to reconsider its interest rate policy. Analysts point out that the market is at a turning point, and ongoing conflicts could lead to further declines. Iran's military actions pose a threat to U.S. forces, exacerbating uncertainty in global markets and testing investor confidence" datetime: "2026-03-23T07:58:03.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/280120240.md) - [en](https://longbridge.com/en/news/280120240.md) - [zh-HK](https://longbridge.com/zh-HK/news/280120240.md) --- > 支持的語言: [简体中文](https://longbridge.com/zh-CN/news/280120240.md) | [English](https://longbridge.com/en/news/280120240.md) # The Iran conflict enters its fourth week: US stocks show a "reverse U-shaped" trend, and the worst moment has not yet arrived Due to the escalation of the Iran conflict and turmoil in the energy market, the S&P 500 index faces greater volatility, and the downside risks have not been completely eliminated. Although the U.S. market has shown resilience, indicators of credit pressure and a surge in hedging demand suggest that the market is adopting defensive strategies and is concerned that a financial crisis may deepen further. Ongoing energy shocks and the possibility of stagflation may force the Federal Reserve to reconsider its interest rate policy, especially in the context of oil prices potentially soaring to $200 per barrel and the ongoing disputes in the Strait of Hormuz. Analysis indicates that the market is at a turning point: if the situation stabilizes, a mid-term bottom may form; however, continued conflict could trigger further declines, especially given that current market valuations have reached 20 times expected earnings. ## Current Situation The Iran war began on February 28 and has now entered its fourth week, but the conflict is far from over. Despite claims from U.S. and Israeli forces that they have severely damaged the Iranian military, the situation remains stagnant. Just last weekend, Iran nearly attacked the U.S.-UK joint military base located on Diego Garcia Island. Reports indicate that Iran launched the attack using medium-range ballistic missiles, which undermines the traditional perception of the advanced missile arsenal possessed by the Iranian regime. Although the attack did not ultimately go as Iran intended, it confirms a viewpoint: Iran has the capability to escalate actions significantly, posing a major threat to U.S. forces, thereby weakening the optimism of the White House and the U.S. Central Command (the primary U.S. regional military command responsible for executing missions). However, the current threat is not limited to the Middle East; consideration must also be given to whether Europe may face the risk of Iranian attacks. As the fourth week approaches, the uncertainty threatening the U.S. market and the global market seems to be on the brink of collapse, although the U.S. stock market has outperformed global markets, demonstrating investors' resilience and confidence in U.S. stocks. ![7707bf48f94e8e13c0efe372eedc404d.png](https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20260323/1774249418838791.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg) As seen in the above chart, the narrative of "going global" has clearly been overturned—namely, "sell American" assets. This has caused turbulence in stock markets outside the U.S., severely impacting investors who bought into this strategy at the beginning of the year. Now, given the U.S. economic energy independence (the U.S. is a net exporter of energy), global investors are beginning to factor in the expectations of prolonged conflict into stock prices. Entering the fourth week, attacks by Israel and Iran on Middle Eastern energy infrastructure, such as the recent liquefied natural gas production disruptions in Qatar, could lead to an inability to continue operations over the next five years, which has a significant impact on countries that heavily rely on energy imports. However, resilience does not mean immunity (for the U.S. economy), which is why the S&P 500 index and the Dow Jones index are still expected to reach November lows this week. Additionally, the downward patterns (the S&P 500 index forming an inverted U-shape and the Dow Jones index forming an inverted V-shape) and the rapidly spreading concerns in the U.S. market have prompted investors to rush to buy hedging tools, with "hedging demand remaining extremely high, VIX short positions being squeezed and turning into net long positions, while stock short positions have surged." ## The Possible Impact of the Iran Conflict on the Future of the U.S. Stock Market Currently, the downward volatility of the U.S. stock market cannot be ruled out, especially as credit market indicators show a sharp rise in credit pressure. Moreover, based on historical backtesting, the current situation is unfavorable. This supports the view that investors are not only adopting more conservative strategies but are also concerned about a potential credit collapse, which could trigger a deeper financial crisis. Given that the current energy shock is primarily manifested as a supply chain shock, the Federal Reserve may find it difficult to respond effectively, thereby weakening its ability to respond positively. Last week, energy prices surged, briefly approaching the highs seen in early March (but have since retreated), leading investors to eliminate optimism about a rate cut within the next 12 months, weakening the dovish stance. If the impasse in the Strait of Hormuz persists for a longer period, the likelihood of maintaining high valuations may be affected. Although a recent report indicates that more countries can now take more proactive measures to "ensure safe passage through the Strait." However, in what form or when will these measures be implemented? These are critical questions that require urgent (even immediate) responses. The market is uncertain whether it is prepared to cope with further prolonged delays, as the threat of high energy prices (including further increases in energy product prices) could reverse the more moderate economic forecasts for early 2026 and potentially lead to an economic recession. Therefore, the Iran conflict seems to have "a few weeks" before the most severe negative impacts truly manifest. Worse still, if investors begin to anticipate a stagflation scenario similar to the 1970s, the possibility of a severe bear market cannot be ruled out. However, the fact is that if control of the Strait of Hormuz is not regained, it will be difficult for President Trump to find a way out. Moreover, as there are no signs of any uprising within Iran and no dissent within the Iranian Revolutionary Guard, the Iranian regime is likely to adopt a very hardline strategy. They have endured continuous strikes from the U.S. and Israel for their survival, which has instead strengthened their resolve to hold on, viewing the survival of their regime as a hard-won victory. If the U.S. seeks to withdraw without completely regaining control of the Strait of Hormuz from Iran, we are likely to fall into a protracted geopolitical dilemma. Iran, as the actual gatekeeper and toll collector of this narrow waterway, may gain the initiative. This situation will undoubtedly worsen the global situation, and as the U.S. weighs whether to take further strong intervention measures to regain the Strait from Iran, the risk of escalating regional conflicts will significantly increase. In other words, the so-called "declare victory and leave" withdrawal strategy is now practically unfeasible. America's Middle Eastern partners are unlikely to be pleased with this; they would probably prefer the U.S. to stick it out rather than back down in the current situation. ![fb5c74c53ac646a9966246d0794951eb.png](https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20260323/1774249426614911.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg) In this context, it may be easy to understand why the S&P 500 index experienced a relatively rapid sell-off, as shown in the above chart, which resembles an inverted U-shaped decline, marking a retest of the late November bottom and completing a significant shift in rotation trading (from growth stocks to value stocks). Compared to another event-driven market crash in April 2025 triggered by Trump's "Liberation Day," this decline is smaller in magnitude. This is mainly due to Trump's concerns about the escalation of the situation at that time, which he quickly alleviated, helping the market rebound swiftly to the 50-week moving average. Currently, this is the first time since then that U.S. stocks are reassessing bear market/recession-related issues while retesting the blue line. Although there has not yet been a bullish reversal, indicating that investors have not actively bought the dip, there remains an opportunity for a reversal, which is anchored above the rising 50-week moving average. In other words, if the market believes that the recent decline has largely reflected the worst-case scenarios stemming from energy market and stagflation concerns, we should see the market begin to reverse in the coming weeks. However, if there is no more constructive progress, or if the market believes that the U.S. must engage in a longer, more protracted, or bloodier ground battle to reclaim the Strait of Hormuz (thus long-term blocking the strait) to end the crisis, investors may even begin to price in expectations of interest rate hikes, as the Federal Reserve may be forced to respond to inflationary pressures brought on by oil prices nearing $200, along with the subsequent impacts of economic slowdown. Considering the good state of the U.S. stock market and economy at the beginning of 2026, this could be one of the worst consequences of the Iran war. Given that capital expenditures in the field of artificial intelligence are expected to approach $700 billion by 2026, the market may even have to accept some delays, as hyperscale data center operators may begin to factor in more concerning energy costs and then pause certain projects until this evolving conflict reaches a clearer resolution, which we currently have no answers for. Therefore, the market is indeed at a turning point, and price movements confirm this. Currently, while a bottom is brewing, the signals are not very clear, and the market still needs signals to validate the judgment that a bottom has formed. If the above measures prove ineffective, the S&P 500 index may experience a more sustained decline, as its current price-to-earnings ratio remains as high as 20 times, well above the historical median of 15 times. 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