The S&P 500 hit a new all-time high Wednesday, a remarkable turnaround for the broad-based stock index while the war with Iran continues and rising energy costs threaten global growth prospects.<\/p>\n
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The S&P 500 closed higher by 0.8% pushing the benchmark past its previous record high of 7,002.28, which it had notched Jan. 28. The index closed at 7,022.95.<\/p>\n
U.S. equity markets have been on a roller coaster since the start of the year. After its January high, the S&P 500 plunged 9.8% to a low of 6,316.91 on March 30, driven by the U.S.-Israel war on Iran and the soaring price of oil.<\/p>\n
But in the two weeks since, markets appear to have adjusted to the constant uncertainty of the war. <\/p>\n
\u201cAs far as the stock market is concerned, the war is over until further notice,\u201d Ed Yardeni, president of Yardeni Research, said. <\/p>\n
\u201cIt has also been another momentum-led rebound, similar to last year\u2019s explosive rally that started on April 9, when President Donald Trump postponed his Liberation Day tariffs,\u201d Yardeni said.<\/p>\n
The momentum Yardeni pointed to is a sharp rise in the shares of the biggest tech companies. Since the S&P’s low on March 30, a fund that measures only the \u201cMagnificent 7\u201d mega-cap tech stocks is up nearly 18%. A fund measuring the S&P 500 absent those seven companies is up about 8%.<\/p>\n
The \u201cMagnificent 7\u201d companies are Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta and Tesla.<\/p>\n
The Nasdaq Composite, which contains many of the largest tech firms, also rose to a new record high Wednesday, surpassing the last all-time high it set on Oct. 29.<\/p>\n
Trump has extended his own war-related deadlines several times, paused some of the heaviest bombing, and most recently sent officials to Pakistan for talks with the Iranian regime. While the talks did not result in a deal, the war remains in the midst of a ceasefire that doesn’t expire until next Wednesday.<\/p>\n
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While much of the world has been focused on the fighting in the Middle East, traders have been looking elsewhere, eager for positive signals about the U.S. economy and a potential end to the war. <\/p>\n
Wednesday’s rally was partly a reaction to comments Trump made Tuesday night about the war. “I think it’s close to over,” he said on the Fox Business Network.<\/p>\n
In the same interview, however, Trump also said that “we’re not finished” with the war yet.<\/p>\n
The rally has also defied conventional wisdom about the impact of energy prices on stocks. Since the start of year, U.S. crude oil has risen by nearly 60%, while international Brent crude oil has jumped about 55%. <\/p>\n
As a result, prices have skyrocketed at the gas pump. As of Wednesday morning, the average price of gas per gallon nationwide was $4.10, up more than 37% since the war started<\/a>.<\/p>\n Economists, meanwhile, continue to warn that high fuel prices will slow the global economy this year. <\/p>\n On Tuesday, the International Monetary Fund cut its global growth forecast to 3.1% in 2026 from its prior estimate of 3.3%. In 2025, the global economy expanded by 3.4%. <\/p>\n The IMF also raised its inflation forecast for 2026 to 4.4% from its prior 4.1% projection.<\/p>\n Yet, over the 10 trading sessions leading up to Wednesday, the S&P 500 rose 9.8%.<\/p>\n “For reference, that\u2019s now even faster than the bounceback after Liberation Day last year, and we haven\u2019t seen a run of gains that quick over 10 sessions since the post-Covid bounceback in April 2020,” Deutsche Bank Research macro strategist Henry Allen wrote in a note Wednesday.<\/p>\n Amid all the optimism, some experts think the markets could be getting ahead of themselves. <\/p>\n “Markets are increasingly pre-empting a positive outcome as the U.S. and Iran prepare for a new round of talks,” analysts at ING said overnight. “We still think caution is warranted.” <\/p>\n