The ongoing escalation of the Middle East geopolitical situation is no longer an isolated regional conflict but has become a core variable influencing the pricing logic of U.S. stocks. Global markets are rapidly repricing themselves in response to this uncertainty.

The most critical transmission chain in this round of conflict is the direct impact of rising crude oil premiums on the Federal Reserve's interest rate cut expectations. Previously, the upward trend in U.S. stocks heavily relied on market expectations of multiple rate cuts by the Fed this year, especially the valuation expansion of growth stocks in the Nasdaq, which was entirely based on optimistic expectations of declining interest rates. The surge in oil prices driven by the escalation in the Middle East directly reversed the inflation decline trajectory, causing market expectations for rate cuts to cool further and undermining the valuation foundation of core U.S. stock assets.

In the short term, the defense, military, and energy sectors have become safe havens for risk-averse capital, but their limited market capitalization weights make it difficult to offset the overall valuation pressure on the broader market. The spillover risks of the conflict also disrupt global supply chains, suppress overseas earnings expectations for multinational U.S. companies, and further amplify market volatility. Currently, U.S. stocks are walking a tightrope between "geopolitical safe-haven" and "interest rate reversal." Any unexpected escalation could trigger a systemic correction in the valuation framework.