Myles Zyblock – Volatility update

A (c)rude awakening

June 13, 2025

Myles Zyblock

S&P 500 futures dropped by almost 2% over night on news that Israel's defense forces struck targets inside of Iran. The price for crude oil, among the most sensitive assets to Middle East developments, surged by about 13% (see chart below). Crude has settled back alongside various measures of financial market volatility since that initial volatility spike. At the time of writing, WTI was holding near a 7.1% gain while the S&P 500 was down by close to 1.1%.

Figure 1: WTI Crude Oil Price Action

Graphic illustrating the price for crude oil which surged by about 13%. Crude has settled back alongside various measures of financial market volatility since that initial volatility spike. At the time of writing, WTI was holding near a 7.1% gain.

Source: Bloomberg

Peace is preferred to conflict, with the latter being a sad, important, and repetitive part of human history. Immediate financial market volatility on the breaking news of conflict is common. The S&P 500 initially dropped by 1.1% when Iraq invaded Kuwait in 1990, and by 4.9% during the September 11 terrorist attacks on U.S. soil. Sell-offs can end quickly, lasting as little as one day, but on average they have persisted for about three weeks when measured using all major conflicts since the December 1941 attack on Pearl Harbor. Using this same history, we found that the U.S. equity market posted a positive return one year later 72% of the time, with a typical gain of 12.7%.

Bottom line: While the onset of conflict is unsettling, financial markets tend to calm down within a few weeks or less. In times like this, it is important to maintain a long-term focus.

Myles Zyblock BA (Hons.), MA, CFA

Chief Investment Strategist

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