Investors pushed past war worries in a stunning reversal that has slingshotted major U.S. stock indexes back to all-time highs.
The S&P 500 on Monday erased its losses for the year and its year-to-date gains now stand at 4.1%. The broad-based index held onto its advance through the week, surging 4.5% to hit a fresh all-time high of 7,126.06 points and marking its best week since May 2025. The Nasdaq composite, meanwhile, added 6.8% this week and also hit a record of 24,468.48 points. The tech-heavy index has posted its best 13-day performance since April 2020.
Those gains came even though the war is still going on, which might sound surprising but isn’t out of the ordinary. Fundstrat Head of Research Tom Lee has highlighted in recent weeks that stocks bottom at the beginning of conflicts. On Friday, Iran said the Strait of Hormuz is open for transit, but the president said the U.S. blockade needs to remain, adding to the confusion. Still, Lee thinks the worst is behind. He said this was a “true V-shaped recovery,” pointing to historical data that suggests that V-shaped recoveries are more the rule, not the exception. “When you hear other people tell you that stock bottoms will take time or they’re V-shaped, that’s just not how markets have worked since 1920,” Lee said in his Macro Minute videos.
Head of Technical Strategy Mark Newton, too, has been impressed by the ferocity of the rally, adding that it helps the breadth and momentum when reversals of this nature take place. “I’m a lot more encouraged than I was a couple months ago,” he said during the weekly huddle. “I think that this is certainly a very real move.”
Arguably, one reason for the stock market’s switch up of fortunes was that banks earnings have helped improve the overall earnings picture. Analysts surveyed by FactSet expect profits from companies in the S&P 500 to grow 13.2% in the first quarter from a year ago, which would mark the sixth straight quarter of double-digit earnings growth.
Many investors are wondering if that’s enough to justify how quick the recovery has been.
Lee and Newton are finally of the same opinion on this.
For weeks, Lee has been recommending investors to buy the dip and adding that the sell-off is 95% done in bitcoin, ethereum and shares of the Magnificent Seven. Now, instead of energy and basic materials stocks being his top pick, it is bitcoin, ethereum and the Magnificent Seven. Newton, however, wasn’t convinced that the spring lows were in until this week. He urges investors to buy the dips, if and when they happen, recommending industrials, tech and financials.
“Happy to join the bullish camp again after a few weeks of negativity,” he said. “I think those spring lows will hold until the third quarter, and we’ll see if we start to get warning signs that would lead the market back down from August until October.”
Chart of the Week
Fundstrat Head of Research Tom Lee believes that the stock market has more room to run in the near term, despite confusion about the war. One big reason is that retail investors didn’t buy the dip as aggressively as hedge funds and other institutional investors. Money market data show that retail raised cash as markets were bottoming, a complete reversal from last year’s Liberation Day when retail pounced in, while institutional investors waited on the sidelines, as our Chart of the Week shows. Lee believes retail coming in now will be “fuel for the continued upside.”
NVDA is important to keep a close eye on as the largest percentage stock within SPX. This breakout should initially face resistance near February peaks at 197.63-198.50 and pull back a bit which should create a good entry for those waiting. ($189.65 being the first meaningful level, then $184.85) Overall, a very constructive move today and the first time NVDA’s daily RSI has reached overbought levels since last October. TD Sell Setups are now present and NVDA also shows an hourly 60-min TD Sequential sell, but this could push up fractionally more to test February peaks into tomorrow which looks meaningful initially. I like NVDA to push back to highs in the next few months, but expect some backing and filling into late April.
WTI Crude oil’s decline has reached the lowest levels on a daily close since March, which bodes well for a larger drop over the next month which could reach $79. This first move down just from the highs made early yesterday likely could initially find support near last week’s lows, (91-92 area in Front month WTI Crude Futures) but it’s thought that this decline back to new monthly lows is underway and might extend down into May with a similar price percentage as the initial drop from early April. Overall this is quite bearish for Crude which by extension, gives some room for optimism that further negotiations should happen with the Iranians and possibly be successful.
Important to note that the Magnificent 7 ETF (MAGS 1.75% ) has successfully achieved a breakout of the prior lows which were broken in February. (Approximately $62.50) This is a quite positive development for large-cap Technology and suspect that SPX should begin to strengthen vs. All-Country World index given the positive snapback in Technology which should help Growth recover. Overall great recent strength out of NVDA, AMZN, GOOGL, and META which has largely helped to spur on this move in Roundhill’s “Mag 7” ETF (MAGS), and i expect this to move back to new highs in the months ahead.
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