STOCKS CAN SURVIVE GEOPOLITICS

GEOPOLITICAL shocks—terrorist acts, wars or military action—can give your portfolio a significant negative charge. The leading geopolitical source of market instability in 2025 has been the Middle East, as in years past. Israel's decision to attack nuclear facilities in Iran in an attempt to retard that country's weaponization efforts prompted a 1.1% drop in the S&P 500 index on June 13.

- PRACTICAL PORTFOLIO BY DAVID MILSTEAD

Among the losers that day, according to S&P Global Market Intelligence: leisure-travel companies Norwegian Cruise Line Holdings and Carnival Corp., which each fell about 5%. Other travel and leisure companies that fell at least 3% that day included United Airlines and Delta Air Lines; Caesars Entertainment, MGM Resorts, Las Vegas Sands and Wynn Resorts; Expedia Group; and Marriott International. Several energy and agricultural companies and defense contractors gained at least 2% that day.

Any unrest in the Middle East can have major impact on the global economy if oil production gets disrupted. Oil shocks in 1973, 1979 and 1990 caused recessions and bear or near-bear markets.

But this past June, the market rebounded quickly as investors saw Iran's retaliatory measure of limited strikes on a U.S. military base as a moderate response. Seven of the 10 travel and leisure companies noted above gained at least 7% from June 13 to the end of the month. Norwegian and Carnival went up 14% and 26%, respectively. Many of the energy, agriculture and defense companies gave back all their gains, plus more. Halliburton, up 6% on June 13, then fell 12% by June 30.