The spike in oil prices due to the escalating conflict between the United States...
NEW YORK - The spike in oil prices due to the escalating conflict between the United States and Iran is causing investors to worry that U.S. corporate earnings will be crimped by rising energy costs.
“Oil is still not prohibitively expensive, but it’s significantly more expensive than it was when companies were making their budgets a year ago,” said John LaForge, head of real asset strategy for Wells Fargo Investment Institute. “They might have the ability to pass it on or they might not, but overall there is going to be a hit to margins.”
The conflict between the United States and Iran escalated early Wednesday with an Iranian missile attack on U.S-led forces in Iraq, sending S&P 500 futures down more than 1.5%, before retracing. They were last down 0.2%. The benchmark S&P 500 closed Tuesday down 0.28% and is up a modest 0.2% a week into the new year after jumping nearly 30% in 2019.
“Stocks are not cheap and we’ve had this huge run-up and sentiment had gotten dangerously bullish,” he said. “I would want to have at least a moderate position in energy if I didn’t have any and some gold in my portfolio.”
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