Investors see past war, sending stocks near all-time high
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The S&P 500 just took a round-trip — the stock benchmark for investors has recovered, and then some, from a war-driven selloff.
Why it matters: It's a split-screen moment: investor enthusiasm happening alongside the biggest energy shock in history, a rise in inflation and warnings about slower economic growth.
The big picture: Investors are betting that the war will soon end and that the disruption in energy — 20% of the world's oil and other petroleum products that have been cut off — will be less momentous than in past oil shocks.
- Plus, companies have just started reporting their quarterly results, and Wall Street is expecting a banger of an earnings season — driven in part by AI.
Where it stands: The S&P 500 closed up 1.2% Tuesday — just 0.2% off its record high reached on Jan. 27.
- The tech-heavy Nasdaq rose nearly 2%, and is about a percent below its all-time high reached last year.
- Oil prices have retreated from the highs seen earlier in the war. Brent crude futures, the global benchmark, are trading below $100 a barrel.
Catch up quick: The S&P 500 was still at high but shaky levels in February as the AI fear trade took hold. Then the war erupted, driving oil prices up and stock prices down.
- By the end of March, the S&P 500 had fallen 7% off its all-time high and the tech-heavy Nasdaq was in "correction" territory, which means a decline of at least 10% from its previous high.
- That appears to have been some kind of bottom. Or at least Wall Street hoped so.
Between the lines: The spring derailment was followed by a strong bounce back — echoing a pattern that happened just a year ago.
- A big April selloff driven by a White House policy — "Liberation Day" tariffs — was followed by a reversal by President Trump that's better known as TACO and stocks rallied.
State of play: A relief rally took hold the day after the ceasefire agreement that was announced on April 7.
- And by Monday, stocks were back to the level they were at before the war.
- Now, they're trading even higher.
Zoom out: This was a vibe shift, perhaps best exemplified in a note from investing giant BlackRock Monday.
- The firm had advised a cautious investing approach at the war's outset. This week it was talking about "buying opportunities."
The bottom line: "Momentum has not been derailed by the geopolitical shock," JPMorgan analysts wrote in a note Monday.
- Over time, stocks mostly go up. They're doing it again.
