S&P 500 Recovers Past Pre-War High Despite 40% Oil Rise
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- S&P 500 rose 1.3% above its February 27 pre-war level on Tuesday, fully recovering from a late-March slide of more than 9% from its late-January all-time high that nearly qualified as a correction
- U.S. crude oil climbed approximately 40% since the war began, with front-month contracts around $92 a barrel versus $76 for December — a contango structure Kourkafas of Edward Jones said signals markets see the energy disruption as temporary
- 10-year Treasury yield rose to roughly 4.25% from 3.96% on February 27, as oil-driven inflation pushed the March CPI to its largest monthly increase in nearly four years
- Federal Reserve rate-cut expectations collapsed to just 10 basis points of easing priced in by December, down from roughly two quarter-point cuts anticipated before the war began
- S&P 500 earnings estimates for 2026 jumped to 19% growth from 15% pre-war, lowering the forward P/E ratio to 20.4 from over 23 in late October and making stocks appear cheaper despite higher prices
- Brad Conger, chief investment officer at Hirtle Callaghan, warned the market is 'a lot worse off than February 27th' and sitting 'at the same price,' calling investor bets on a quick resolution evidence of 'a lot of complacency'
- Optimism accelerated after a two-week ceasefire agreement was reached last week, though the article notes 'much about the situation remained uncertain' and Q1 earnings season in coming weeks will test the 19% growth estimate
Why it matters: Stocks have round-tripped back to pre-war prices while oil sits 40% higher, 10-year yields have climbed 29 basis points, and rate cuts are nearly priced out — meaning the S&P 500's recovery rests entirely on the ceasefire holding and the upgraded 19% earnings growth estimate holding up when Q1 results land in coming weeks. Conger's Hirtle Callaghan is flagging that if the war re-escalates or earnings disappoint, the 'priced-in resolution' trades in reverse with no valuation cushion from lower rates to absorb the hit.
