U.S. equities began the new year exactly where they left off last year, by establishing yet another record high of 3,257.85 in the S&P 500® Index on the first day of trading. But that positive market sentiment was suddenly halted on day two by news of the U.S. drone strike in Iraq. The immediate reaction in markets came as expected. Stocks fell, while oil, bonds, gold, and volatility all rose. Overall, the reaction in stocks was relatively contained, as investors attempted to assess the likelihood and extent of further escalation between the U.S. and Iran. Having said that, stock markets in the Middle East were down sharply in Sunday trading, with Egypt down 4.7 percent, Kuwait down 4.1, UAE down 3.1, and Saudi Arabia, Qatar, and Bahrain all down in excess of 2 percent, according to Bloomberg.