Wall Street holds 7,700 S&P 500 target despite Iran war
SkimNews Take
Wall Street's willingness to overlook a 63% Polymarket invasion probability reveals that equity valuations have decoupled from tail-risk pricing, while prediction markets face their own self-censorship pressure during active conflicts.
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- S&P 500 is down about 4% and nearly 6% below its all-time high, even with oil above $100 since the Iran war began — a level strategists cite as evidence the market is 'looking past' the conflict.
- President Trump signaled last Tuesday he was considering winding down military presence in Iran over the next two to three weeks, triggering a 2.9% single-day S&P 500 gain — the index's largest since May.
- Yardeni Research (Ed Yardeni and Elias Griepentrog) said they will likely lower their recession probability from 35% to 20% once the Middle East conflict's end is clearer, while holding their 7,700 S&P 500 year-end target and 'Roaring 2020s' base case.
- UBS Global Wealth Management's Ulrike Hoffmann-Burchardi wrote that the sharp rebound on positive headlines reinforced the importance for long-term investors to stay invested, stating UBS expects global stock markets to end the year higher than today.
- Carson Group's Ryan Detrick told Yahoo Finance the market's resilience through so much negativity suggests 'that beachball under the water gets some good news and that ball can go up.'
- Schwab Center for Financial Research's Kevin Gordon noted analysts haven't materially cut earnings estimates, saying that reflects data not yet showing the economy is struggling.
- FactSet data shows companies and analysts heading into first-quarter earnings season have been more optimistic than usual in their outlooks.
Why it matters: For long-term investors, the market's resilience during a genuine oil shock and active military conflict — holding within 6% of all-time highs — demonstrates that geopolitical risk has not derailed the structural bull case. The 2.9% one-day rebound on a single Trump sentence reveals how coiled and headline-dependent sentiment remains, meaning the downside risk is still latent beneath the surface calm.
