May 20, 2026
How to get to 9,000 on the S&P 500
Why are stocks at record highs with no Iran resolution?
A nearly 10% drawdown and a swift recovery. All within just six weeks. The S&P 500 is now trading near all-time highs. And yet, there’s no resolution to the conflict in Iran, or even a clear roadmap of next steps—just a naval blockade around one of the world’s busiest waterways.
In the face of uncertainty, markets sell first and ask questions later. That’s no secret. But stock market bounce backs seem to be happening faster and faster. In some ways, it’s a sigh of relief. But it also breeds a nagging question: Is the market shrugging off conflict risk…again? Or are investors anchoring their hopes on something more durable?
A faster than ever V-shaped rebound
For some, the market action over the past two weeks has been a head-scratcher. Several major global equity indices hit or approached record highs in a tear that included a 13-day Nasdaq‑100 winning streak, marking its longest string of gains in over a decade. Even the S&P 500 and Russell 2000 have seen 9% and 11% month‑to‑date gains, respectively. The rally has been indiscriminate.
The speed of the rebound may seem extreme. After a nearly 10% drawdown in the S&P 500, a full recovery to pre-conflict levels only took 11 trading sessions. Cautious investors may think that’s too fast, but over the years, recoveries have become faster and faster thanks to outsized liquidity, evolved market structures and often easier monetary policy. Historically, staying invested, despite geopolitical volatility, can yield long-term gains. Investors remember that and are favoring reengagement.
Market declines have recovered faster and faster
Days to recover a >10% loss
Source: Bloomberg Finance L.P. Data as of April 22, 2026. Note: Iran conflict (2026) is a 9.1% decline.
Outlooks and past performance are no guarantee of future results. It is not possible to invest directly in an index.
The pace around the world
It’s a similar story abroad. Korean and Taiwanese markets reached record levels. Emerging markets rebounded at an even faster rate than U.S. benchmarks.
But the recovery has been uneven, and that divergence matters. Europe and Japan—despite seeing fierce rebounds —continue to trade well below pre-conflict peaks.
The rebound hasn’t been felt equally across regions
Price return since March 30, 2026, %
Source: Bloomberg Finance L.P. Data as of April 22, 2026. Note: Emerging markets: MSCI EM; Europe: EURO STOXX 50; Japan: TOPIX Index.
Outlooks and past performance are no guarantee of future results. It is not possible to invest directly in an index.
In Europe, the explanation is straightforward. The region outperformed earlier in the year in line with international outperformance, and valuations rose alongside aggressive earnings expectations. Going into the energy shock, Europe was already quite vulnerable.
And now, the region’s worry isn’t just about relative valuations, but negative earnings going forward. It’s far from the rosier picture seen in the United States, especially as it lacks one of the key drivers of this stock market recovery: a technology weighting.
Prices bounced back, but valuations lagged
Although the S&P 500 returned to its best levels last week, its valuation has fallen from peak levels. At the end of 2025, the benchmark traded above a 23 multiple on a 1-year blended forward price-to-earnings basis. Today, that figure is below 21. And the repricing is even more dramatic in the technology sector.
Tech valuations are far from their highs
1-year blended forward price-to-earnings multiple
Source: Bloomberg Finance L.P. Data as of April 22, 2026.
Outlooks and past performance are no guarantee of future results. It is not possible to invest directly in an index.
There’s more to this than just price recovery. Future earnings expectations have risen even faster, even as the conflict in Iran has weighed on investors. But here’s the twist: a rebound was already underway before geopolitical clarity emerged. That suggests this rally is being driven less by confidence around the war and more by faith in the fundamentals.
Earnings didn’t blink
The prevailing fear during the drawdown was that conflict-related consequences would bleed into corporate margins, investment and, ultimately, consumer behavior. Instead, early earnings reports show the opposite.
Companies are beating Wall Street’s earning expectations at a pace we haven’t seen in years. With about 25% of the S&P 500 having reported so far, roughly 83% have topped earnings estimates. That stands well above the five-year average of 78%. Revenue growth is also on track for its strongest levels since 2022, with 77% of companies topping revenue estimates relative to the five-year average of 70%.
With both revenue and earnings beating estimates at this rate, the recent rally to all-time highs would signal that the bid has been backed by well-founded conviction in corporate America’s fundamentals.
If the rest of earnings season delivers as expected, it would mark six straight quarters of double-digit earnings growth — the longest such streak since the recovery from the 2008 financial crisis.
That said, even with outsized growth projections, the median stock is expected to grow earnings by about 8%, marginally higher than the 7.5% historical average for the index as a whole. That divergence is driven by the technology story. Powerful earnings growth reinforces that the rebound is not a knee-jerk rally, but a durable reflection of strength in the sector, and the broader index.
KEY RISKS
Investing in emerging markets involves a greater degree of risk and increased volatility compared to developed markets. Changes in currency exchange rates and differences in accounting and taxation policies outside the investor's jurisdiction can raise or lower returns. Some markets may not be as politically and economically stable, in addition to differences in taxation policies, and legal systems outside the investor's jurisdiction may create additional risks. Investors should carefully consider these risks and consult with financial and legal advisors before investing in emerging markets.
Important Information
Despite persistent geopolitical uncertainty and a naval blockade in the Middle East, global equities have staged a rapid recovery, bolstered in the United States by durable earnings fundamentals in tech and beyond.
Justin Biemann
Global Investment Strategist
Published Apr 24, 2026
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