Geopolitical tensions have taken a toll on the U.S. stocks. The conflict in Syria, where the U.S. began airstrikes earlier this week, was among several issues credited with fueling the global anxiety that caused yesterday's stock market rout.
But how much exposure does the benchmark Standard & Poor's 500 actually have to the Middle East?
According to a report by FactSet, the answer is "very little." Granted, roughly half of the revenue from companies in the S&P 500 comes from outside the U.S. The Middle East, however, generates roughly 1.9% of the index’s top line, according to a report published today.
Nevertheless, since the U.S. began escalating military activity in the region, the S&P 500 has fallen roughly 2%. As John Butters, senior earnings analyst at FactSet, writes:
At the sector level within the S&P 500, the three sectors that generate the highest percentage of revenue in aggregate from the Middle East region are the Industrials (3.7%), Information Technology (3.5%), and Energy (3.2%) sectors. At the industry level, the three industries that generate the highest percentage of revenue in aggregate from the Middle East region are the Tobacco (6.5%), Construction & Engineering (6.3%), and Industrial Conglomerates (6.0%) industries. Thus, revenue exposure to the Middle East region is limited for the S&P 500 even at the sector and industry levels.
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