Stock market recovers from Iran war despite forecasters cutting targets
In late February 2026, the US and Israel launched military strikes on Iran, and major Wall Street firms like JPMorgan and Wells Fargo immediately cut their stock market price targets, predicting constrained gains due to elevated oil prices and reduced consumer confidence. However, the market's actual performance has defied these pessimistic forecasts. After an initial eight percent decline from late February to late March, the S&P 500 has gained over twelve percent since then and recently hit all-time highs. This pattern mirrors historical trends where Wall Street significantly underestimated market performance five of the past six years. While the Strait of Hormuz remains disrupted, affecting about twenty percent of global oil supplies, and near-term inflation risks persist, corporate earnings have remained resilient and a preliminary ceasefire agreement in April has reduced immediate escalation fears. The disconnect highlights how geopolitical shocks often overly discount market recovery potential.
Key facts
- S&P 500 declined 8 percent from Feb 27 to March 30, then gained 12 percent over the following two weeks, reaching new all-time highs by mid-April
- JPMorgan and Wells Fargo cut price targets after Feb 28 strikes, but Wall Street underestimated market gains in 5 of the past 6 years
- The Strait of Hormuz closure disrupted 20 percent of global oil supplies, the largest oil supply disruption in history according to the IEA
- Oil prices surged from about 80 dollars per barrel to over 120 dollars, then retreated to around 96 dollars by mid-April as ceasefire hopes grew
- Consumer sentiment declined sharply in March, particularly among middle and higher-income households concerned about gas prices and market volatility
How different outlets framed it
Left-leaning coverage: Progressive outlets highlight the war's disproportionate impact on vulnerable populations and energy-dependent emerging economies, pointing to how higher oil prices squeeze low-income households particularly hard. They also underscore concerns about insider trading and government officials profiting from prediction markets tied to Iran announcements, raising questions about the Trump administration's credibility.
Right-leaning coverage: Right-leaning analyses emphasize that the operation demonstrates strong executive decision-making under uncertainty and that corporate America remains fundamentally sound. They point to the US being a net energy exporter and highlight how strong corporate earnings and AI investment momentum provide structural support for equity valuations despite temporary headwinds.
Limits of this briefing
The ceasefire announced in early April is fragile and technical reopening of shipping remains incomplete, meaning oil prices could spike again if conflict escalates. Additionally, most forecasts assume a short conflict duration, but a prolonged war could validate pessimistic predictions and trigger broader economic damage.
Sources
- The Motley Fool: Wall Street Is Slashing Stock Market Targets Over the Iran War Centre
- Charles Schwab: Iran War: Ceasefire Offers Relief, Not Resolution Centre
- PBS News: Iran war puts prediction markets back in the spotlight Left
- Morgan Stanley: Iran Conflict: Oil Price Impacts and Inflation Centre
- Euronews: S&P 500 and Nasdaq hit new all-time highs despite Iran war effects Centre