War Drags On, Stocks Party Like It’s Over

The New York Times, Reuters, the Financial Times contributed to this report.

At first glance, it doesn’t add up. Oil is expensive, tensions with Iran are still simmering, and yet Wall Street keeps climbing.

The S&P 500 and Nasdaq Composite have both pushed back to record highs in recent days, capping a sharp rebound that began just weeks after markets stumbled at the start of the conflict. Investors seem to be betting that whatever damage the war might bring, it won’t be enough to derail corporate America.

Part of that optimism comes down to earnings. A heavy slate of first-quarter results is rolling in, and expectations are strong – roughly a 14% jump from a year ago. Nearly a fifth of S&P 500 companies are reporting in the coming days, giving traders plenty to focus on beyond geopolitics.

Markets have clearly shifted their gaze. War headlines still move prices day to day, but the bigger driver right now is profit. Big tech, which took a hit during the initial selloff, has roared back. Names like Alphabet and Meta Platforms are again helping lead the charge, pulling the broader market higher.

The speed of the comeback is striking. After sliding about 9% from its January peak when the war began, the S&P 500 has surged more than 12% since late March, blasting past the 7,000 mark for the first time. Historically, rebounds of this size take time. This one took just days.

Still, not everyone is buying the narrative.

Oil prices are holding near $85 a barrel, well above pre-war levels. That carries consequences – higher inflation, rising borrowing costs, pressure on consumers. Some investors worry the market is brushing those risks aside too easily, acting as if the past few weeks were just a temporary shock.

There are early signs of strain. Gas prices have climbed, hovering around $4 a gallon in the US, and that could start eating into spending. Retail data in the coming days will offer a clearer read on whether households are feeling the pinch.

For now, though, the mood remains upbeat. Even with the conflict unresolved, traders are leaning into the idea that earnings will hold up and the economy can take the hit.

The next big test is just ahead. Heavyweights like Tesla, Boeing, Intel and Procter & Gamble are set to report, with Microsoft, Alphabet and Meta close behind.

If the numbers deliver, the rally could keep going. If not, markets may have to confront the risks they’ve been willing to ignore.