U.S. stocks have surged back to record territory as market attention pivots from war-related concerns to corporate results that could validate the rally. Hopes for a de-escalation in U.S.-Iran tensions have helped lift sentiment this month, with major indexes reaching new highs after a drawdown tied to geopolitical events.
On Wednesday the benchmark S&P 500 posted its first record-high close since Jan 27, while the Nasdaq Composite recorded its first all-time-high close since Oct 29. Investors are now turning to a substantial week of first-quarter earnings reports that market participants expect will provide substantive support for the recent upswing in equities.
Earnings season and market focus
Nearly one-fifth of S&P 500 companies are scheduled to report results in the coming week, creating a concentrated flow of corporate data for investors to digest. Market participants said the emphasis has shifted from day-to-day geopolitics to how stocks react to profit reports and guidance.
"We’re certainly not out of the woods" from war-related developments that could cause daily market swings, said Chuck Carlson, chief executive officer at Horizon Investment Services. "But I think the market has shifted its attention now ...toward corporate profits and how stocks respond to those profits."
Among the headlines, Tesla is set to report on Wednesday and will be the first of the so-called "Magnificent Seven" technology megacaps to disclose quarterly results. Other notable companies scheduled to report this week include planemaker Boeing, semiconductor manufacturer Intel and consumer products maker Procter & Gamble. Larger megacaps such as Microsoft, Alphabet and Meta Platforms are slated to report in the following week.
Market rebound and historical context
The market recovery has been unusually rapid. After the outbreak of the conflict, the S&P 500 fell about 9% from its January peak. Since the index's low on March 30, it has rallied roughly 11%, climbing above the 7,000 level for the first time at the close this week.
Bespoke Investment Group highlighted the speed of the rebound, noting that in instances of S&P 500 pullbacks between 5% and 10% since 1928, the index had never before returned to all-time highs in just 11 trading sessions - a feat the market achieved on Wednesday. "The velocity of this ascent has been nothing short of astonishing," Jim Reid, head of macro and thematic research at Deutsche Bank, wrote in a note.
Large technology and tech-adjacent firms, which have been leaders in the years-long bull market, were among the hardest hit in the initial selloff. Some of these names, including Alphabet and Meta Platforms, have been prominent in the rebound, while the broader technology sector has outpaced many others. The Nasdaq extended a winning streak, finishing Thursday higher for a twelfth straight session - the longest such run since the 2009 recovery following a steep decline.
"If you are looking for broad participation in the market and you are making new highs and your generals are now coming back to life a little bit, I say that is probably something that is pretty healthy," said Jeff Weniger, head of equity strategy at WisdomTree.
Investors are also watching signs of speculative behavior, such as rapid moves in shares like Allbirds after the company announced a strategic pivot to AI computing infrastructure - an example market participants cite when evaluating potential froth.
Macroeconomic variables and market risks
While equities have rallied, oil prices remain elevated and represent a tangible economic headwind. U.S. crude was trading around $94 a barrel on Thursday, up from about $67 in late February just before U.S.-Israeli military strikes on Iran. Higher sustained oil prices can feed into inflation and push Treasury yields up - dynamics that could undermine stock valuations.
"The stock market is treating what has happened over the last six weeks as if it has just woken up from a bad dream," said Michael Mullaney, director of global markets research at Boston Partners. "Like ... there are no further ramifications or repercussions from this. Which I don’t agree with."
Major banks began the earnings period this week, reporting strong trading revenues after a volatile first quarter. While those firms flagged economic risks, they also described continued resilience among consumers and households.
"The American consumer, while facing real pressure, has not broken based on early Q1 bank earnings," Anthony Saglimbene, chief market strategist at Ameriprise, said in a written commentary.
Yet several data points and forthcoming events could shape investor conclusions about the economy and policy. Kevin Warsh, President Donald Trump’s pick to lead the Federal Reserve, is scheduled to appear before Congress for a hearing on Tuesday. The question of the path of interest rates remains central to market pricing; despite criticism from President Trump of current Fed Chair Jerome Powell for not cutting rates faster, market participants have largely discounted rate reductions this year due to the potential inflationary impact of the conflict.
Retail sales data for March, also due on Tuesday, will provide additional insight into consumer behavior after energy costs jumped. Gas prices rose to about $4 a gallon in the wake of the war, and investors will be watching whether higher fuel costs have begun to dent discretionary spending.
"I suspect these prices aren’t dropping down anytime soon and that is going to have an effect on discretionary spending going forward," said Robert Pavlik, senior portfolio manager at Dakota Wealth Management. "So the claim that the U.S. economy is in good shape is in my opinion near sighted."
What to watch this week
- First-quarter earnings from about one-fifth of S&P 500 companies, including Tesla, Boeing, Intel and Procter & Gamble.
- Bank earnings that will further illustrate the state of consumer resilience and corporate trading activity after a volatile quarter.
- Retail sales for March, which will signal whether higher gasoline prices are weighing on consumer purchases.
- Kevin Warsh's congressional hearing, which will contribute to the market's view of Fed leadership and the likely path of interest rates.
Collectively, these corporate and economic data points will be critical in determining whether the recent equity gains can be sustained or whether concerns about inflation, higher yields and geopolitics will reassert pressure on markets.