The stock market is reeling after American and Israeli jets struck strategic Iranian targets beginning Feb. 28, sending oil prices and investor sentiment into rapid swings. Markets have alternated between sharp drops and brief rallies as reports of back-door U. S. -Iran negotiations, denials from Iran and additional missile launches moved prices. As of March 27 ET, volatility measures and major indexes show the tangible market damage and the case for lower-volatility positions.
Stock Market pulse: volatility spikes and index losses
Volatility has surged: the CBOE VIX volatility index rose from 19. 86 at the close on Feb. 27 ET to 31. 36 on March 27 ET, an increase of almost 58 percent. The S&P 500 has fallen from 6, 878. 88 on the day before the first strikes to 6, 368. 85 on March 27 ET, a loss of 7. 4 percent. Nasdaq and the Dow are described as already being in correction territory, with the S&P 500 noted as likely to follow into correction territory next week.
These moves have been driven in a pattern: early strikes and news of leaders killed pushed oil and stocks in one direction; tentative reports of back-channel talks and hopes of a ceasefire pulled oil down and stocks up; denials from Iran and renewed missile launches sent oil up and stocks down again. Market participants have been reacting in real time to each swing in the diplomatic and military developments, producing a volatile, grind-lower market dynamic.
Defensive play: utilities and Canadian Utilities as calmer ground
One recommended defensive response is to add low-volatility stocks to portfolios, with utilities highlighted as a go-to sector. The S&P/TSX Capped Utilities Index was up 9. 26 percent year-to-date as of March 26 ET and is down only 0. 75 percent since Feb. 27, presenting a relatively stable pocket amid broader declines. An easy way to gain exposure cited is the iShares S&P/TSX Capped Utilities Index ETF (XUT-T), whose units are up about 9 percent so far this year and which carries a trailing distribution yield of 3. 5 percent.
For investors preferring individual names, Canadian Utilities Ltd. (CU-T) is singled out for its year-to-date performance and longer-term recovery. Canadian Utilities, based in Calgary and a subsidiary of ATCO Ltd., operates in electricity generation, transmission and distribution, and in natural gas transmission and distribution, plus energy storage and industrial water solutions. The company has invested in green energy projects for more than 20 years, employs approximately 8, 600 people and holds assets of $25 billion.
Performance figures in recent commentary show Canadian Utilities’ share price up roughly 32 percent over the past 12 months and up about 13. 1 percent year-to-date. The company’s fourth-quarter adjusted earnings were $197 million ($0. 72 a share), $6 million ($0. 02 a share) lower than the same quarter the prior year, with a $57-million impact attributed to a temporary decrease in the regulated 2025 return on equity and other factors.
What’s next for investors and the stock market
Outlook hinges on the course and duration of the conflict: the longer strikes and retaliations continue, the greater the potential for sustained investor anxiety and downward pressure on share prices. Market watchers note that short-term relief tied to negotiation headlines can quickly reverse with new military actions, and indexes that have so far avoided technical correction may join the retreat if the conflict persists. Investors seeking to reduce portfolio risk are being steered toward lower-volatility utilities exposure while the situation unfolds.
