Wall Street was different when oil last reached wartime highs in late March. As the S&P fell 1.7% in a single session, the Nasdaq entered correction territory, and brokers refreshed screens flashing the kind of red they hadn’t seen since January, traders arrived at work on Thursday already prepared for bad news. The same indexes are gradually returning to records six weeks later. Brent is still in the neighborhood of $101. In reality, nothing about the war has been settled.
As you pass the trading desks on the lower floors of midtown buildings, you get the impression that investors’ reactions to bad news have changed. Not exactly denial. More akin to exhaustion. A muscle memory developed over the Houthi attacks in the Red Sea, Ukraine, and more than a dozen smaller flare-ups that failed to disrupt the market. There would have been a near-panic in 2022 if Iran had tightened its hold on the Strait of Hormuz, creating what Washington officials have begun to refer to as a toll booth for tankers. It causes a flat opening and a recovery rally by lunchtime in May 2026.
| Snapshot: The Wartime Stock Rebound | |
|---|---|
| Subject | U.S. equity markets during the Iran war |
| Benchmark Index | S&P 500 |
| Recent Low | 6,477.16 (March 26, 2026) |
| Approx. Current Level | Back near record territory |
| Brent Crude Price | ~$101 per barrel |
| Pre-War Brent Price | ~$70 per barrel |
| 10-Year Treasury Yield | 4.42% |
| Strait of Hormuz Share of Global Oil Flow | ~20% |
| Federal Reserve Stance | Rate cuts on hold |
| Inflation Watchdog | Bureau of Labor Statistics |
| Worst Sector in Late March | Big Tech (Nasdaq down 10%+) |
| Reporting Period | Late March – Early May 2026 |
It’s possible that Wall Street is correct and everyone else is mistaken. That’s the unsettling idea. Despite the fact that about one-fifth of the world’s seaborne oil still passes through that small waterway, shipping insurers—who are usually the first to know—have not pulled out in the same manner as they did in previous crises. Gulf Coast refiners are allegedly hoarding, but they’re not yelling. The futures curve is in a mild backwardation, which is trader shorthand for “we’ll deal with this, just not forever.”
The most peculiar aspect of it is technology. Due to a social media addiction verdict that, in the cold light of a quarterly filing, hardly touched Meta’s profit margins, the company saw an 8% decline in late March. The same afternoon, Alphabet fell 3.4%. Since then, both have recovered almost all of it. Similar to how Apple was ten years ago, Nvidia, which dropped 4.2% during that same session, is once again being discussed in research notes. As this develops, it’s difficult to avoid wondering if the market is rewarding the AI narrative to such an extent that a regional conflict won’t be able to stop it for very long.
The bond market is more subdued and less accommodating. This math eventually appears in mortgage applications, small-business loans, and the spreadsheet of a local manufacturer attempting to refinance. The 10-year yield is still parked at 4.42%, up from 3.97% prior to the fighting. The Fed, which traders entered the year expecting to cut several times, is now doing the opposite of cutting. It is awaiting. Powell’s team has made the decision to do nothing visible, which is a decision in and of itself, because they are caught between an oil shock that raises inflation and a faltering labor market that begs for relief.
Older portfolio managers who lived through 1990 and 2003 feel that this rally has the feel of something that won’t end smoothly. They remember the months before the first Gulf War, when stocks also looked stubborn before they cracked. The comparison may or may not be valid. Humans operate markets as pattern-recognition machines, and they grow weary of fear. For the time being, the tankers are still in motion, the screens are green, and Wall Street has determined that the war is someone else’s problem for reasons that may seem clear or ridiculous in retrospect.
