Why are the US stocks hitting record highs, and why is the market no longer afraid of the war?

Title: U.S. Stocks Hit Record Highs, Why Is the Market No Longer Afraid of War?

Author: Rhythm BlockBeats

Source:

Repost: Mars Finance

On April 15, the S&P 500 closed at 7,022.95 points, exactly 77 days after reaching its previous all-time high. During these 77 days, the U.S. waged a war, oil prices broke $100, and the stock market experienced its fastest 10% correction in five years. Then, within about 11 trading days, it returned to a new high.

This number is worth pausing to think about. Eleven trading days—across U.S. history, after crises of similar scale, this speed is unprecedented.

What does 11 trading days mean in history?

Where does this recovery speed stand in the historical timeline?

According to PBS, JPMorgan strategists called this recovery “the fastest rebound since the COVID-19 pandemic.” When looking at historical figures, this statement is not exaggerated.

In 2020, during the COVID-19 pandemic, the market took about 103 trading days to go from the low on March 23 to a new high on August 18. During the Gulf War in 1990, from the late October low to the February 1991 high, it took about 87 trading days. In 2011, during the U.S. debt crisis, from October lows to March 2012 highs, it took approximately 106 trading days.

The current recovery from the Iran war in 2026: 11 trading days.

It’s important to note that the decline during this correction (about 10%) is much smaller than during COVID-19 (about 34%) and 2011 (about 19%). But even when compared to the similar decline in 2022 during the Russia-Ukraine conflict, which took about 18 trading days to recover, 11 days remains an outlier.

The narrative behind this correction has always been “ceasefire expectations,” not “deterioration of economic fundamentals.” The market was falling due to uncertainty, not earnings. When ceasefire news actually emerges, the uncertainty pricing is quickly eliminated, without waiting for quarterly reports to rebuild confidence.

The word “ceasefire,” market has risen twice

To understand the speed of this recovery, we first need to clarify the news context.

On February 28, the U.S. and Israel launched military strikes against Iran. The S&P 500 started declining from the previous high of 7,002 points on January 28, and by March 30, it fell to 6,316 points, a maximum drop of nearly 10%. According to Wall Street standards, this precisely borders on a “correction.”

But during this decline, something strange happened. On March 24, rumors circulated about the potential unblocking of the Strait of Hormuz, and the S&P rebounded that day. This was the first “ceasefire pricing.” The rumors were later disproved, and the market continued to decline.

On April 8, Trump announced a two-week temporary ceasefire on social media, and Iran also accepted Pakistan’s mediation plan. The S&P 500 surged 2.5% in a single day. This was the second “ceasefire pricing,” with the price rising again for almost the same reasons.

From Chart 1, we can see that the two significant upward movements correspond to symmetrical events, both indicating “rising ceasefire probability.” The first rise, then the second. And as of the record high on April 15, the two-week temporary ceasefire agreement has not expired, and no permanent peace treaty has been signed.

What scenario is the market pricing in? Not “war ending,” but “war possibly ending.” This expectation has been priced twice.

Fear index lower than before the war

An even more counterintuitive number is the VIX, Wall Street’s measure of market panic.

At the outbreak of war on February 28, the VIX jumped from about 16 to a peak of 35.3 on March 9. This makes sense: war is risk, and markets price uncertainty.

But the subsequent trend defies common sense. From March 9 onward, despite ongoing war, rising oil prices, and the Senate voting on war powers, the VIX steadily declined. By April 15, the day the S&P hit a record high, the VIX closed at about 18.4, lower than the pre-war level of around 16.

What does this imply? It suggests that the market has reclassified this war from an “uncertainty source” to a “measurable risk.” Within six weeks, an ongoing war shifted from a “panic event” to “quarterly raw materials.”

This shift is driven by a very specific financial mechanism. According to CNBC, JPMorgan’s Q1 2026 trading revenue reached $11.6 billion, a record high, up 20% year-over-year. Fixed income revenue was $7.1 billion, mainly driven by commodities, currencies, and emerging markets trading—areas where Iran war-induced volatility is most concentrated.

In other words, when ordinary investors feel fear, professional institutions profit from volatility. The smoother this mechanism operates, the more the market tends to “digest” the war, and the faster the VIX falls back.

Volatility commercialization

On April 15, the same day the S&P 500 hit a record high, the Pentagon announced an additional 10k troops to the Middle East, and the Senate vetoed the war powers resolution for the fourth time. Both events happened on the same day, and the market showed no reaction.

From Chart 4, we see that JPMorgan’s Q1 2026 trading revenue bars are much higher than those of the previous eight quarters. This is not marginal improvement but a leap.

What supports this leap is the profit hedge funds and market makers make from war-related volatility. According to Goldman Sachs Prime Brokerage data, as of April 14, U.S. hedge funds’ net long positions had turned positive for the first time since late 2025. Meanwhile, Atwater Malick cited FINRA data showing that the margin loan balance in U.S. stocks hit a record high of $1.28 trillion, up 36% year-over-year.

All three signals—hedge funds shifting from short to long, record leverage, and market highs—appear simultaneously. This is a classic “optimistic trading” pattern.

To understand this pattern, one must look at the financial infrastructure layer. When Wall Street’s market makers, derivatives markets, and hedge funds are sufficiently mature, geopolitical shocks are no longer external, unpredictable risks but raw materials that can be priced, hedged, and commercialized. For JPMorgan’s trading division, the Iran war is not a threat but an opportunity. For hedge funds that positioned correctly, it’s the same.

This is the true meaning of the “two screens, two worlds” on April 15. The Pentagon prolongs the war, while the market prices in its end. These two are not contradictory because, for market makers, how long the war lasts is less important than whether volatility is sufficient.

Of course, this mechanism has its vulnerabilities. The record high in 11 trading days implies an assumption: that the two-week ceasefire will be smoothly renewed, Iran nuclear negotiations will proceed as expected, and oil prices will fall. If any of these assumptions fail, the current pricing has little buffer. The $1.28 trillion in leverage can also amplify market downturns.

7,000 points is a level that only holds in the most optimistic scenario.