Markets Are Acting Like the Crisis Is Ending
Stocks just posted their sixth straight weekly gain, with the S&P 500 now up roughly 16% during that stretch—one of the strongest six-week runs in over a decade.
The message from the market is obvious:
Investors believe a deal with Iran is coming, oil prices will fall, and the global economy will keep moving forward.
Maybe they’re right.
But markets are no longer cautiously optimistic—they’re increasingly confident.
And that changes the risk equation.
Earnings Continue to Overpower the Headlines
Despite war concerns, higher energy prices, and inflation pressure, the market keeps climbing for one reason:
Corporate earnings have been exceptionally strong.
- More than 80% of companies are beating earnings estimates
- S&P 500 earnings growth is now running around 26%
- Technology earnings continue to lead the charge
This is the strongest earnings backdrop we’ve seen since 2021.
That’s hard for investors to ignore.
The Economy Is Still Surprisingly Resilient
What’s remarkable is how well the economy has handled the energy shock so far.
- Hiring remains solid
- Unemployment claims remain historically low
- Consumers are still spending despite higher gasoline prices
Even with gas now above $4 per gallon nationally, demand hasn’t materially cracked.
That resilience has helped markets largely price out the worst-case war scenario.
Inflation Is Becoming More Embedded
This is the part investors shouldn’t dismiss.
Inflation is no longer isolated—it’s spreading more broadly across the economy.
In many developed countries, price pressures are now running well above central bank targets.
The growing belief in markets is essentially:
“3% inflation may be the new 2%.”
That matters because persistent inflation tends to keep interest rates higher for longer.
The Rally Is Getting More Speculative
There are also signs that optimism is accelerating.
Options traders are heavily positioned for upside, and sentiment has become increasingly aggressive.
At the same time, market participation underneath the surface has started to weaken somewhat.
That doesn’t mean the rally ends tomorrow—but it does suggest expectations are becoming elevated again.
My Perspective
This market has transitioned from fear to confidence very quickly.
- Earnings are strong
- The economy is holding up
- And investors believe geopolitical tensions will eventually cool
That combination supports higher prices.
But there’s also very little room left for disappointment.
Because at this point, markets are assuming:
- A deal gets done
- Oil stabilizes
- Growth stays intact
- And inflation eventually moderates
That’s a very favorable outcome—and much of it is already reflected in prices.
Bottom Line
- The market remains strong
- Earnings continue to surprise positively
- The economy is proving more durable than expected
But:
- Inflation is becoming more entrenched
- Expectations are rising quickly
- And investor optimism is returning in force
The trend remains positive.
The margin for error does not.
About Gary Hager
Gary K. Hager, CFP®, CBEC, CTFA is the founder of Integrated Wealth Management. He advises business owners and families on exit planning, estate strategies, and long-term wealth structuring.