Author: Claude, Deep潮 TechFlow
DeepCoin Summary: Despite the breakdown of U.S.-Iran negotiations, the blockade of the Strait of Hormuz, and oil prices rebounding above $100, the S&P 500 closed up 1% on Monday, erasing all losses since the Iran conflict began and reaching 6,886 points. JPMorgan, Morgan Stanley, and BlackRock all issued bullish statements on the same day, sharing a consistent core argument: corporate earnings resilience far outweighs geopolitical shocks. Meanwhile, the Reddit investing community erupted, with retail investors declaring, “The market isn’t even paying attention to the news.”
On the first trading day after the breakdown of U.S.-Iran negotiations, the U.S. stock market displayed a curve that left everyone puzzled.
On April 13 (Monday), the S&P 500 rose 69 points, or 1%, to close at 6,886; the Dow Jones Industrial Average gained 302 points, or 0.6%; and the Nasdaq Composite increased 1.2%. On the same day, Trump announced on a social media platform that the U.S. Navy would immediately initiate a blockade of the Strait of Hormuz, causing Brent crude to briefly surge above $100 per barrel before retreating to close at approximately $98.16, while WTI crude closed at $97.82.
The S&P 500 rose to its highest level since late February, fully recovering all losses since the outbreak of the Iran conflict. The surge in oil prices coincided with the stock market rally, which may seem logically contradictory. However, the largest Wall Street institutions offered a highly consistent explanation: corporate earnings remain strong, geopolitical shocks have limited staying power, and now is the ideal window to buy the dip.
Three major institutions all issued bullish views on the same day, with the core rationale pointing to profit resilience.
JPMorgan, in a research report authored by strategist Mislav Matejka, stated that declines driven by geopolitical shocks should ultimately prove to be buying opportunities.
The team of Morgan Stanley strategist Michael Wilson believes that the recent sell-off in the S&P 500 is more likely a correction rather than the beginning of a sustained downtrend, supported by improved earnings growth and a return to reasonable valuations. Morgan Stanley continues to favor cyclical sectors such as financials, industrials, and consumer staples, as well as high-quality growth names like AI hyperscale computing.
On the same day, BlackRock Investment Institute upgraded its U.S. equity rating from "Neutral" to "Overweight," making it the most aggressive among the three. Jean Boivin, head of BlackRock Investment Institute, said the valuation premium for the technology sector has been eroded, while the expected earnings growth rate for the sector in 2026 has risen to 43%, up from 26% last year.
BlackRock noted in its weekly market report that two indicators triggering its rebalancing have emerged: one is concrete evidence that navigation through the Strait of Hormuz is resuming, and the other is that the lasting macroeconomic damage from the conflict has proven to be contained.
Three institutions cited the same data: According to LSEG I/B/E/S, as of April 10, the expected earnings growth rate for the S&P 500 in Q1 was 13.9%, higher than the pre-conflict forecast of 12.7%. In other words, in the nearly seven weeks since the conflict began, analysts have not lowered their earnings expectations—they have raised them.
The "Seven Giants" have seen their valuations contract, creating a buying opportunity
JPMorgan specifically noted in its report that the forward P/E premium of the Magnificent Seven (NVIDIA, Apple, Microsoft, Meta, Google, Amazon, and Tesla) has narrowed significantly from 1.7 times the S&P 500 to 1.2 times.
This data serves as a key argument for Wall Street bulls: the concentration issue that has suppressed market breadth over the past two years is self-correcting due to valuation reversion.
BlackRock noted that the valuation premium of the technology sector relative to the other ten sectors has fallen to its lowest level since mid-2020. The company stated that, amid resilient corporate earnings expectations and limited global growth damage, it is opting to rebalance into U.S. and emerging market equities.
Historical data supports: Geopolitical shocks are typically absorbed within six weeks.
The optimism from Wall Street institutions is not unfounded. UBS research shows that historically, when the S&P 500 declines by 5% to 10% over three to four weeks, it typically returns to its pre-decline level within six months.
LPL Research's review of geopolitical shock events since World War II shows that the average first-day reaction was a decline of about 1%, with an average peak-to-trough decline of approximately 5%, an average time to bottom of about 19 days, and an average recovery period of about 42 days.
In a research report released in mid-March, UBS noted that from the outbreak of the conflict on February 28 to March 13, global stock markets declined by only about 5%, while oil prices rose by approximately 40% during the same period. The stock market's relative insensitivity to the oil price shock itself validates the aforementioned historical pattern.
UBS lowered its S&P 500 year-end target from 7,700 to 7,500 on April 6, and adjusted its medium-term target from 7,300 to 7,000, while maintaining its overall assessment of U.S. equities as "attractive," with its 2026 EPS forecast unchanged at $310.
Reddit investors' soul-searching question: "The market doesn't look at news at all."
Institutional consensus can still be explained by data, but retail community reactions more directly reflect current market sentiment.
On Reddit’s r/stocks, a post titled something like “Now do you believe it? The market doesn’t move for news” received 923 upvotes and 159 comments. The poster’s core argument was: the market moves first, then finds reasons. The Strait of Hormuz blockade was the clearest example he had ever witnessed, with numerous comments expressing confusion over the disconnect between geopolitical risks and market pricing.
"The market rose because most people believe this won't matter in five years, and that's not irrational." This post received 344 likes and 199 comments, representing the typical stance of long-term investors.
On the r/wallstreetbets subreddit, a post with 504 upvotes pointed out that the physical oil market is screaming "supply shock," while the stock market remains calm, leaving traders confused by the conflicting signals between the two markets.
The confusion of retail investors stands in sharp contrast to the confidence of institutions, but the underlying logic is simply two sides of the same issue: institutions are betting on profit resilience and limited downside risk, while retail investors wonder why bad news hasn’t translated into a price decline.
The answer may be simple: the market completed a pricing cycle in March and is now in a rebound phase where bad news has been priced in.