Markets rebounded after war-driven selloff, supported by resilient earnings, easing volatility, and AI-led tech strength, with strategists expecting momentum to continue despite geopolitical risks and upcoming Fed decision.
The stock market has largely brushed aside uncertainty over the timeline for resolving the U.S.-Iran conflict, an outcome crucial for restoring normal shipping flows through the Strait of Hormuz.
The S&P 500 E-mini futures (ES) and and the Mini Dow Jones Industrials futures (YM) contracts edged higher, while the Nasdaq 100 futures (NQ) were marginally lower.
War Dip & Rebound: The Iran war, which started on February 28, dragged the S&P 500 Index from its pre-war level of 6,878.88. The index hit a post-war bottom of 6,316.91 on March 30, and since then it has been higher for nine out of the 10 sessions.
S&P 500 YTD Chart
Source: TradingView
The S&P 500 is now just about 35 points short of its intraday high of 7,002.28, reached on Jan.8.
Volatility has also subsided from the peak seen during the crisis. The CBOE Volatility Index Futures (VX1!) has retreated from above 30 seen in early March to just above 20.
CBOE Volatility Index Futures (VX1!) YTD Chart
Source: TradingView
Earnings To Support? The corporate profit growth that has been one of the main catalysts powering the current bull that started in late 2022, is widely expected to hold. Of the 4% of the S&P 500 companies that have reported earnings as of April 10, 80% reported above-consensus earnings and 90% reported positive revenue surprises, according to FactSet.
The firm expects the cumulative year-over-year earnings growth of the companies that are part of the S&P 500 to be at 12.6%, which, if materialized, would mark the sixth straight quarter of double digit earnings.
What Strategists Say: Most strategists expect the market to weather the war storm. Ed Yardeni of Yardeni Research noted that this has been yet another “V-shaped buy-the-dip recovery” in the S&P 500, offering a buying opportunity arising from a geopolitical crisis. The strategist also noted that the current recovery has also been a momentum-led rebound, similar to last year's explosive rally that started on April 9, when President Donald Trump postponed his Liberation Day tariffs.investors’ expectations that the elevated energy prices are only transient.
Louis Navellier attributed the market rebound to a lack of earnings estimate cuts. The tech sector has seen a strong recovery, with the artificial intelligence (AI) theme remaining a key driver. Dutch semiconductor equipment maker ASML on Wednesday reported forecast-beating results and raised its 2026 guidance.
The current uptrend could sustain at least until the April Federal Open Market Committee (FOMC) meeting (April 28-29), provided downside earnings surprises are limited.