Volatility is Expanding as Oil Prices Surge: Here's What to Do

Market Overview - The S&P 500 index is approximately flat through early March 2026, remaining less than 2% away from all-time highs despite ongoing concerns, particularly regarding the conflict in the Middle East [1] - Oil prices have surged to their highest levels of the year due to geopolitical tensions, particularly following military actions involving the US and Israel against Iran [1][7] Geopolitical Impact - The recent military operation, "Operation Epic Fury," resulted in the death of Iranian leader Ayatollah Ali Khamenei, prompting retaliatory attacks from Iran on US military bases and other regional targets [3] - Historical trends indicate that while geopolitical events can cause short-term volatility, stock markets often recover quickly, with minimal long-term impact on US economic fundamentals or corporate profits [4][6] Energy Sector Performance - The Zacks Oils and Energy sector has significantly outperformed the broader market, achieving a 22% return year-to-date [11] - Higher crude oil prices positively affect oil company margins and profits, creating investment opportunities as crude prices continue to rise [13] Company Spotlight: Baker Hughes - Baker Hughes (BKR), a leading oilfield service provider, has shown strong performance, with stock rising over 36% this year and consistently surpassing earnings estimates with an average earnings beat of 12.7% [15] - The stock is favorably ranked in growth and VGM categories, indicating strong potential for investors [15]