Why Stocks Keep Climbing Despite the U.S.-Iran War

CNBC reported Tuesday that the stock market rally defying the U.S.-Iran conflict has genuine fundamental backing — not just speculative momentum.

The S&P 500 closed above 7,400 for the first time on Monday. That milestone came despite oil prices remaining elevated and the conflict entering its third month with no peace deal visible.

How Far Stocks Have Come

The index bottomed near 6,300 in March, then climbed approximately 17% in just over a month to reach those record levels. When U.S. strikes on Tehran first began on February 28, the S&P 500 fell only around 8% peak to trough. That decline never even qualified as a formal correction, which requires a drop of at least 10%. Oil has since surged above $120 a barrel at its peak, settling back above $100. Gasoline prices nationally have crossed $4.50 a gallon, with several states above $5.

The Limited Corporate Damage Behind the Rally

A key driver of the stock market rally is how few companies are actually absorbing serious costs from the war. Trivariate Research analyzed more than 1,465 earnings call transcripts filed since early March. The firm found that only around 10% of total U.S. equity market capitalization faces a negative or even mixed impact from the conflict — and noted that estimate likely overstates the real damage. For the broader S&P 500, energy remains a relatively small input cost for most businesses. Consumer discretionary is the sector facing the most visible pressure, with multiple companies already flagging war-related headwinds to household spending.

A Background of Extraordinary Tech Earnings

The second pillar sustaining the rally is the outsized earnings power of the largest technology companies. Apollo’s chief economist Torsten Slok noted that the ten biggest S&P 500 companies now account for roughly 34% of the index’s total profits. That figure has doubled since 1996. JPMorgan’s trading desk separately highlighted that earnings growth among the Magnificent Seven technology giants is running more than 40 percentage points ahead of the remaining 493 index constituents. That gap is the widest since 2014. Artificial intelligence investment is credited with sustaining that divergence. Because the largest tech firms derive most of their revenues from software and digital services, the physical supply chain disruptions caused by Strait of Hormuz blockages have limited direct effect on their margins.

The Bigger Picture

The U.S. economy is also simply less oil-dependent than it once was, giving the broader market a structural buffer against energy shocks that would have been more damaging in prior decades. That combination — resilient corporate margins, AI-powered tech profits, and reduced oil sensitivity — explains why the stock market rally has proved so persistent even as the geopolitical environment remains unresolved.

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