The benchmark US equity indices surged to new territory entering price discovery, reflecting a market that appears to be looking past immediate geopolitical risks in favour of potential de-escalation and corporate strength.
On Wednesday the S&P 500 closed 0.8% higher at 7,022 points, up on the day and surpassing its previous peak from January of this year.
The S&P 500 is now 11% higher since it bottomed on 30 March and after it first dropped 9% during last month.
The Nasdaq Composite also posted a record, rising 1.6% to over 24,000 points while the Dow Jones Industrial Average edged 0.15% lower and continues significantly below its all-time high.
The advance comes despite persistent headwinds.
Shipping through the Strait of Hormuz, a critical chokepoint for roughly one-fifth of the global oil supply, has been severely disrupted since late February following Iranian actions and a subsequent US naval blockade.
Traffic has dropped sharply, with Iran declaring the strait closed to vessels linked to the US, Israel and their allies.
The US Central Command also confirmed its blockade of Iranian ports took full effect earlier this week, stating that “ten vessels have now been turned around and ZERO ships have broken through since the start of the US blockade on Monday”.
Oil prices, while easing in the last two weeks, remain elevated.
At the time of writing, Brent crude stands at around $96.5 per barrel and WTI at $92.5, still well above pre-war levels and contributing to inflationary concerns.
The International Monetary Fund has responded by lowering its global growth outlook. In its latest World Economic Outlook, released on Monday, the IMF cut the 2026 forecast to 3.1% from 3.3% previously projected, citing energy price spikes and supply disruptions.
Headline inflation is now seen at 4.4% for the year, under a reference scenario assuming a short-lived conflict, with risks of even weaker growth and higher prices if tensions escalate and prolong.
The modest decline in energy prices followed reports that the two-week ceasefire is holding and that fresh talks between the US and Iran could resume soon.
US President Donald Trump also indicated that negotiations for lasting peace might restart by the end of the week.
Investors appear to be pricing in an eventual reopening of the Strait of Hormuz and a contained negative impact of the war in general.
Speaking to Euronews, Alan McIntosh, chief investment officer of Quilter Cheviot Europe, explained that “although the first round of talks led to no agreement, a likely extension of the ceasefire gives optimism that an early resolution can be reached”.
“Assuming a fairly swift end to hostilities and a resumption of oil shipments, the economic damage to global inflation and growth should be fairly limited,” he added.
Analysts point to several factors behind the market resilience.
Hopes of a swift end to hostilities have encouraged risk-taking, while corporate America is showing strength. Bank executives highlighted a strong US consumer and a healthy pipeline for deals and initial public offerings.
Earnings expectations for the first quarter have been revised higher, with S&P 500 companies now forecast to report combined profits of over $605 billion (€513bn), up from earlier estimates.
Tech shares, particularly those linked to AI, provided additional support. The Nasdaq’s outsized gain reflected renewed enthusiasm for growth-oriented stocks even as broader economic projections softened.
McIntosh told Euronews that “the capital spending boost relating to AI shows no sign of slowing down so this continues to support US economic growth. We have just started the US quarterly results season and so far there is limited evidence of a negative impact from the current Middle East conflict”.
The indices also include defence companies that have all performed well with the war in the backdrop pushing governments, in particular the US, to increase military budgets.
History also offers context for the current rebound. In past US-involved wars, equity markets have frequently experienced short-term volatility followed by recovery and gains.
During the 2003 Iraq War, for example, the S&P 500 rose over 25% in the first full year after the invasion began.
The Gulf War of 1990-1991 saw an initial 11% decline in the index, but a strong relief rally followed the swift coalition victory, delivering positive returns in the subsequent year.
Similar patterns emerged in the Korean War and Vietnam War eras, where stocks posted solid long-term advances despite prolonged uncertainty.
Data compiled by the Royal Bank of Canada and other sources indicate that, across multiple conflicts, equities rose in the first year of hostilities around 60% of the time.
Markets have tended to focus on eventual outcomes rather than immediate shocks, rewarding resolution and economic adaptability. The latest record for the S&P 500 and the Nasdaq underscore this enduring pattern.
While risks remain if the Iran conflict worsens, investors are currently betting that diplomacy and corporate fundamentals will prevail.
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Companies whose stock prices have historically shown high correlation to movement in interest rates recently saw an all-time high as odds of rate hikes may seem more plausible for investors than rate cuts.
Although it has lagged in the past
Michael Jordan didn’t seem too upset.
Hours after Kevin Durant knocked him out of the top five on the NBA’s all-time scoring list , Jordan was all smiles as he walked to Victory Lane to greet Tyler Reddick after the driver’s win Sunday at Darlington Raceway.
Reddick — who drives for 23XI Racing, which is co-owned by Jordan and veteran driver Denny Hamlin — joined NASCAR Hall of Famers Dale Earnhardt and Bill Elliott as the only Cup Series drivers to win four of the first six races in a season.
To do so, Reddick had to overcome a malfunctioning battery and a large deficit in the final 50 laps. Afterward, Jordan jumped the track’s safety barrier to greet Reddick and his team with some hard high fives and enthusiastic cheers.
“I think the key to him winning was just keeping his head,” Jordan said after the race. “We just had to get the car right, and I think he did an unbelievable job. I just wanted everything to be good, because once he gets back out there, then I feel like his competitive juices are going to carry him all the way to the end. He earned it all week, and I’m real proud of the team.”
Earlier this year, Reddick became the first NASCAR driver to start the season with three consecutive wins. He stands atop Cup Series standings, leading second-place Ryan Blaney of Team Penske by 95 points. Reddick’s 23XI teammate Bubba Wallace is currently in third place.
One night earlier, Durant scored 27 points in the Houston Rockets’ 123-122 victory over the Miami Heat to overtake Jordan for fifth place on the NBA’s all-time leading scorer list. In his 18th season, Durant has 32,294 points — two more than Jordan, who played 13 seasons for the Chicago Bulls and two for the Washington Wizards. Durant and the Rockets play the Bulls in Chicago on Monday.
Jordan has yet to comment publicly on the matter, but Durant had plenty of praise for the man considered by many to be basketball’s GOAT on Saturday during his postgame news conference.
“It’s kind of crazy passing him up because he’s meant so much to the game,” said Durant, who passed Wilt Chamberlain and Dirk Nowitzki on the scoring list earlier this season and now trails only Kobe Bryant, Karl Malone, Kareem Abdul-Jabbar and all-time leader LeBron James.
“I’ve been inspired by all of these players that I’m either coming close to or passing up, and MJ is in a world of his own,” Durant added. “He’s in a galaxy of his own as somebody that I look up to, respect and who basically shaped the game for me.”
Durant also pointed out that Jordan would have scored many more points had he not taken multiple seasons off during the span of his playing career.
“He left a few, I want to say, thousand or so points on the table, too, with the amount of games he missed,” Durant said. “… He scored points quickly, man. So he set the bar high, and it’s pretty cool to reach that bar.”
The Associated Press contributed to this report.