U.S. equities may have further upside, underpinned by solid earnings momentum, Capital Economics says in a note. While high oil prices typically weigh on stock performance, the firm argues the U.S. entered the conflict from a position of strength and does not currently see a recession as likely. This backdrop could allow the S&P 500 to grind higher even if oil remains elevated. Still, Capital Economics cautions that sharp swings in investor risk appetite could ultimately dominate market directio

U.S. equities may have further upside, underpinned by solid earnings momentum, Capital Economics says in a note. While high oil prices typically weigh on stock performance, the firm argues the U.S. entered the conflict from a position of strength and does not currently see a recession as likely. This backdrop could allow the S&P 500 to grind higher even if oil remains elevated. Still, Capital Economics cautions that sharp swings in investor risk appetite could ultimately dominate market direction. Investors are closely monitoring developments in the Middle East conflict.