Catenaa, Monday, March 16, 2026- Investors may be underpricing the market risks the Iran war can trigger, as it can lead to global economic turbulence, according to Bank of America.

“While a quick resolution to the conflict is certainly a possibility, we view the conflict extending into the second quarter as an equally likely outcome, and a more protracted war cannot be ruled out,” BofA Securities Global Economist Antonio Gabriel wrote in a Monday note. “However, markets seem to be pricing a largely transitory shock.”

The S&P 500 Index has only fallen some 4% from its record high, which Gabriel sees as evidence that investors are relatively sanguine about the war — even as inflation concerns push traders to curb their views on how much the Federal Reserve will cut rates this year.

Dip-buyers appeared to step in on Monday, with the benchmark index recently up around 1% as oil prices slid.

“In our view, markets are focusing mostly on inflation, while more disruptive scenarios for global growth may be underpriced,” Gabriel wrote.

With the trajectory of the war far from certain, Wall Street is scrambling to determine how the conflict will ultimately impact equities.

For now, strategists at Goldman Sachs Group Inc. and Morgan Stanley remain upbeat on stocks, pointing to support from earnings growth and less-inflated valuations.

Still, markets are “a bit complacent” on the war, according to Stephen Parker, Co-Head of Global Investment Strategy at JPMorgan Private Bank.

West Texas Intermediate crude oil fell to $$95.14 in Monday morning trading on hopes more tankers will be able to traverse the Strait of Hormuz.

The S&P 500 Index climbed. Commercial maritime traffic through the Strait of Hormuz has been halted during the conflict.