The wall of worry gets another brick

US equities face a growing “wall of worry,” with fresh geopolitical risks from the Iran conflict adding to existing concerns around AI disruption, stretched valuations in asset-light growth names, private credit, tariffs, and the path of inflation. Despite this backdrop, the outlook remains for modest but volatile single-digit gains in US stocks through 2027, with an emphasis on active stock selection as growth-oriented names confront ongoing valuation and disruption pressures. The case for maintaining an overweight to equities and a tilt toward Value and defensive sectors is reinforced by accelerating defense spending and potential support for energy companies from supply disruptions near the Strait of Hormuz.

However, oil prices are a critical swing factor: moderate strength would aid Value indices, while a sustained move above roughly $90 per barrel could threaten the recovery at the lower end of the economy and risk reigniting inflation, complicating Federal Reserve policy. For now, the Iran war is viewed as a temporary headwind rather than a thesis-changing event; only a prolonged conflict that inflicts lasting damage on global energy supplies would prompt a reassessment of this constructive but cautious stance.