Geopolitical events like what's happening in Ukraine and Gaza can be market movers but still take a back seat to the biggest influence of all: the Federal Reserve.
That's the position both of Peter Boockvar, managing director and chief market analyst at The Lindsey Group, and, it appears, the market itself after a healthy bounce back from Thursday's rout.
"Geopolitical influences on markets are usually fleeting and the news yesterday will likely be, too, but the intensification of the conflict and increased amount of sanctions will further damage the Russian economy which was already on its heels," Boockvar said Friday in a note to clients. "That said, of all the global concerns out there, I remain of the belief that the Federal Reserve is the biggest risk to asset prices than anything geopolitical."
The lost 1 percent Thursday after the downing of a Malaysia Airlines jet over Ukraine and as Israel directed military force against Hamas in Gaza. However, much of those losses were wiped out in Friday morning trading as investor trained their focus closer to home.
The U.S. central bank is in the midst of winding down its aggressive bond-buying program, cutting purchases this year from $85 billion a month to $35 billion. Recent indications from Fed Chair Janet Yellen and others are that the quantitative easing program will end its third cycle completely at the October Open Market Committee meeting.
In addition to heralding the end of QE, Fed officials also have expressed concern about possible distortion in market prices, with Yellen pointing to technology and biotech as specific areas she is watching.
Boockvar believes it's the Fed's own policies of encouraging asset bubbles that create concern and ultimately lead to the end of the current bull market, which has gone about two years without a correction, or drop of at least 10 percent.
"The Fed has created an asset price-dependent economy over the past 15+ years, and the last two bear markets began when asset price bubbles (stock bubble, followed by house price bubble) popped and the recession followed," he said.
"Today, there is a another credit market/yield-grab bubble and will then of course be extraordinarily sensitive to what and when the Fed does next.'
The central bank had been expected to wait until mid-2015 or later to begin raising short-term interest rates, but an accelerating economy and declining unemployment rate have some predictions now putting a hike earlier in the year.
"Markets are pricing in later rather than sooner for the first rate hike but the pace of improvement in their dual mandate stats are happening faster rather than slower," Boockvar said. "I encourage the Fed to end its bubble blowing ways and normalize policy sooner rather than later for our long-term benefit but at the unavoidable cost of short-term asset price adjustment."
—By CNBC's Jeff Cox