The S&P 500 closed at a new record high on Wednesday, its first since the US-Iran conflict began, as hopes of a de-escalation in the war and robust earnings expectations drew investors back into risk assets.
The S&P settled at 7,022.95, up 0.8%, LSEG data showed, surpassing its previous closing high in January. It also hit a new intraday record of 7,026.24.
US President Donald Trump has said talks with Iran to end the war could soon resume after the first round of talks in Islamabad collapsed. Equity markets fell sharply last month when hostilities erupted, unleashing a historic shock to oil markets and reviving concerns about inflation and the outlook for US interest rates.
The S&P 500 slid as much as 9% after the conflict broke out on February 28, stopping short of the 10% threshold generally considered a correction. The Nasdaq and the Dow Jones Industrial Average both hit the 10% correction level during the sell-off.
Markets have drawn support from expectations for strong corporate earnings. Executives at big banks said US consumers remained resilient despite the oil shock, while the pipeline of deals and IPOs was robust.
S&P 500 should earn $605.1 billion for first three months of 2026
Analysts expect S&P 500 companies to earn a combined $605.1 billion for the first three months of the year, up from $598.7 billion forecast at the start of the quarter, according to LSEG data.
Several brokerages have viewed the selloff as an opportunity to snap up equities at a bargain as the conflict lowered valuations. Still, the prospect of renewed escalation in the conflict looms, with any flare-up likely to test the market's recent confidence.
Even if geopolitical risks fade, the concerns that dominated sentiment before the war could re-emerge, particularly fears of disruption linked to artificial intelligence.
Private credit firms have also been contending with redemption risk as nervous investors head for exits.