U.S. economic data drove optimism on Wall Street, with the S&P 500 rising 0.8% on Friday, even as the Senate authorized military action against Iran. The vote followed Iran’s alleged attack on a U.S. drone in the Red Sea, escalating tensions that have already disrupted shipping lanes and spiked oil prices. Investors initially dismissed concerns, focusing on robust U.S. GDP growth and strong job numbers that suggest resilience despite global uncertainty.**

The conflict’s ripple effects loom large. Oil futures surged 3% as fears of wider Middle East instability threaten energy supplies. Meanwhile, markets are pricing in potential sanctions on Iranian oil exports, which could tighten global supply. Analysts note that while U.S. data provides short-term support, prolonged conflict risks derailing investment flows into emerging markets and straining corporate earnings abroad.**

Bond markets reacted cautiously. Treasury yields dipped slightly as traders weighed the dual pressures of inflationary pressures from oil shocks and the Federal Reserve’s hawkish stance. European equities followed U.S. cues, with Germany’s DAX up 0.5%, though Asian markets remain volatile ahead of further developments.**

This divergence highlights a fragile balance. Policymakers must navigate escalating geopolitical risks while maintaining confidence in economic fundamentals. With oil prices and military posturing dominating headlines, traders will closely monitor OPEC+ decisions and White House statements next week. The situation underscores how intertwined financial and security dynamics have become in an era of renewed great-power competition.