US and Israel Are Bombing Iran — And Oil, Defense, and AI Stocks Are Reacting in Real Time

Let's not bury the lede: the US has fired hundreds of Tomahawk missiles at Iran, Israel is striking Tehran, Iran has retaliated with missile waves hitting Tel Aviv, and the Strait of Hormuz — through which roughly 20% of global oil flows — is blockaded. Britain says 40 countries are now in talks about reopening it. This is not a drill, and the market is absolutely feeling it.

Oil is the most obvious trade. Morgan Stanley is projecting a 3 million barrel-per-day surplus once Hormuz normalizes — but that normalization isn't expected until end of July at the earliest, per Bloomberg's Samantha Dart. Meanwhile, $XOM, $CVX, and the broader energy complex are getting a geopolitical bid that Wall Street hasn't seen since 2022. On the flip side, $LMT and $RTX are quietly becoming the most obvious beneficiaries as Pentagon prepares for weeks of ground operations. Cleveland Fed's Hammack is already flagging that a closed Strait is a direct inflation input — and she's not ruling out rate hikes.

The S&P 500 and Nasdaq just posted their best quarter since 2020 — almost entirely on AI euphoria — and now the market has to price in a hot war simultaneously. That's not a contradiction, that's just 2026.