Slate Daily Feed What Next: TBD | Tech, power, and the future - War in Iran, Shockwaves in Markets
Mar 6, 2026
Justin Wolfers, a University of Michigan professor of economics and public policy, explains market moves after the Iran strikes. He breaks down S&P futures and VIX spikes. He compares market signals from past wars and why non‑US markets and oil importers suffer more. He discusses oil’s effect on consumers, producers, inflation measures, and how market reactions might shape political choices.
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Markets Aggregate Future Economic Expectations
- Financial markets are the best imperfect forward-looking aggregator of people's beliefs about the economic future.
- Justin Wolfers argues markets price billions of dollars of bets, so stock moves reflect expected changes in firms' net present value, not just headlines.
Small Stock Moves Can Mean Big Perceived Losses
- A 1% drop in the S&P500 represents roughly $600 billion in market cap, about $2,000 per American on average.
- Wolfers uses this arithmetic to show even a small percent move implies meaningful perceived long-run profit losses from conflict.
Market Moves Reflect Probabilities Not Certainties
- Recent market moves likely reflected previously priced-in probabilities of conflict so the weekend actions represented a partial realization.
- Using past Iraq-era relationships, Wolfers notes scaled probabilities implied far larger potential full-war impacts on equities.