Stocks Are Up 8% on a War That Isn't Over | Prof G Markets
Two months into the Iran conflict, markets are thriving while oil prices remain elevated. The S&P has surged 8% since the ceasefire announcement, with tech-heavy indexes leading the charge and global markets rallying in near lockstep. The paradox is stark: consumer sentiment has hit record lows, yet spending remains stable and corporate earnings are breaking records. The central question facing investors is whether this resilience reflects genuine structural shifts in the economy, or whether markets are simply ignoring warning signs that haven't yet materialized in quarterly results.
Ключевые выводы
Since the ceasefire announcement, the S&P is up 8%, the NASDAQ up 12%, and global markets from Europe to Asia are rallying, suggesting investors believe either the war will end soon or that tech and services economies are insulated from energy shocks.
Taiwan (up 15%) and Israel (up 9%) lead global market gains, driven by their central roles in AI chip production and military technology innovation respectively, demonstrating that proximity to AI now outweighs oil import dependency.
Consumer sentiment has reached record lows, yet consumer spending remains stable and corporate earnings across all sectors have risen, with tech sector earnings estimates seeing their largest increase in recorded history.
Oil prices remain elevated at over $103 per barrel for Brent crude, up 35% in the U.S. since the war began, but markets are betting that a tech and services economy dominated by the top 10% of consumers will absorb these costs without material impact on earnings.
The greater threat to market performance may not be the Iran war or energy prices, but a potential announcement from a major corporation scaling back AI investments due to disappointing ROI — a scenario more likely to trigger a drawdown than geopolitical instability.
Вкратце
Markets have decided that proximity to AI and tech dominance matter more than energy prices, betting that the U.S. and tech leaders like Taiwan and Israel will thrive regardless of how long the Iran conflict drags on — though the real test will come if elevated oil prices persist long enough to squeeze consumer spending or if AI investment returns disappoint.
The Market Paradox: Rallying Through Conflict
Stock markets surge globally despite two months of war and elevated oil prices.
Two months into the Iran conflict, markets have defied conventional wisdom. Since Trump's ceasefire announcement on February 28th, the Dow is up 6%, the S&P up 8%, and the NASDAQ up 12%. This isn't just a U.S. phenomenon: Europe gained 3%, Germany 4%, China 5%, India 5%, and Japan posted a remarkable 10% gain. Meanwhile, Brent crude oil remains above $103 per barrel, 35% higher than pre-war levels, and shows no signs of sustained decline.
The disconnect between oil prices and market performance suggests investors have reached one of two conclusions. Either they believe the war will end soon, despite little evidence supporting that view, or they've decided that energy costs simply don't matter as much in an economy increasingly dominated by technology and services. Corporate earnings support the latter interpretation: every sector has seen earnings estimates rise since the war began, with tech sector estimates posting their largest increase in recorded history. Companies from JPMorgan to Microsoft appear largely insulated from Strait of Hormuz disruptions.
The market has become what one analyst calls «an incredibly resilient organism,» shrugging off wars and pandemics with consistent dip-buying. As long as demographic growth and technological innovation continue, this resilience may persist. But the real question isn't whether markets can ignore today's elevated oil prices — it's whether they can continue to do so if those prices remain elevated for quarters to come, and whether AI investments will deliver the returns that justify current valuations.
Winners and Losers: The AI Proximity Premium
The Consumer Sentiment Disconnect
Record-low sentiment coexists with stable spending and soaring corporate earnings.
The Unanswered Question: Duration and Impact
Markets haven't yet experienced prolonged elevated oil prices in this economy.
The Unanswered Question: Duration and Impact
The critical unknown is what happens if oil prices remain elevated for multiple quarters. While the economy has electrified and the wealthy are less sensitive to gas prices, the U.S. hasn't stress-tested this new economic structure against sustained energy inflation. The disconnect between backward-looking data showing resilience and forward-looking uncertainty creates real risk that markets may be underpricing.
By the Numbers: Market Performance Since Ceasefire
Global equity gains dwarf energy concerns across all major markets.
The Real Threat: AI Returns, Not Oil Shocks
Disappointing AI ROI poses greater risk than Middle East conflict continuation.
“I think that is going to be more likely to be responsible for a draw down in stocks in 2026 than Iran or the oil or energy crisis.”
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