War headlines have a way of making every portfolio feel fragile.
For three straight weeks, the Iran conflict did exactly that. It sent oil prices soaring roughly 40% since the first U.S.-Israeli strikes on February 28, rattled shipping lanes through the Strait of Hormuz, and shaved 3.6% off the S&P 500 in the process, according to CNBC. If you opened your brokerage account during those weeks, the numbers looked like a slow bleed with no bottom in sight.
Then Monday happened.
The S&P 500 climbed 1% on March 16 to close at 6,699.38, its strongest session in five weeks. The Dow Jones Industrial Average rose 388 points, or 0.8%, to close near 46,946, while the Nasdaq Composite jumped 1.2%, according to the Associated Press. Artificial intelligence and semiconductor stocks drove the Nasdaq’s outperformance, with Nvidia leading the charge ahead of its GTC 2026 developer conference, according to The Independent.
It was the kind of relief rally that reminds you how quickly the market can shift once the fear begins to price itself out.
What actually drove stocks higher
The Iran conflict did not end. Oil did not collapse. The Federal Reserve did not cut rates.
What changed on Monday was more subtle, and frankly more important for long-term investors to understand.
Crude oil prices, which had briefly surged past $100 per barrel last week for the first time in four years, showed early signs of stabilizing. White House economic adviser Kevin Hassett told Reuters that tankers were already “starting to dribble through” the Strait of Hormuz, and expressed confidence the conflict would resolve “in the near term, rather than months.”
“Already, we are witnessing tankers beginning to trickle through the straits, which I believe indicates how limited Iran’s resources are,” Hassett said.
That was enough for markets to breathe again.
Goldman Sachs added fuel to the fire with a research note arguing that “the supply shock today appears narrowly concentrated in the energy sector,” a key distinction from the 2021-2022 inflation surge that rattled the entire global economy, according to the Wall Street Journal. The note landed just 48 hours before the Fed’s March 18 rate decision, and markets priced in a 99% probability that the central bank would hold rates steady between 3.5% and 3.75%, according to CBS News.
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That combination, tankers moving, Goldman offering calm, and the Fed expected to do nothing dramatic, gave investors enough cover to buy.
The Iran conflict rewrite of the safe-haven playbook
Here is the part that surprised even veteran market watchers.
In a normal geopolitical crisis, investors sell stocks and buy government bonds. Demand drives bond prices up, yields down. That is how it has worked for decades.
This time, it did not work that way.
U.S. Treasury yields climbed instead of falling as the conflict escalated. The bond market’s traditional safe-haven status was tested as investors worried more about inflation from disrupted oil supplies than about immediate economic collapse, according to a CNBC report on the bond market’s unusual behavior.
Goldman Sachs CEO David Solomon described this dynamic bluntly at the Australian Financial Review Business Summit on March 3.
“I think the market reaction has been more benign, given the magnitude of this, than you might think,” Solomon told the audience.
But he was not dismissing the risk. Solomon specifically questioned whether the conflict would filter through to global energy supply chains in a lasting way.
“Does this become a more prolonged thing? Does it start to filter through to energy supply chains? Does it have other impacts that affect consumer sentiments and consumer behaviors in different parts of the world?” Solomon said. “Those are the things that I think you have to watch, and you don’t have enough information or data at this point to be clear.”
The Hormuz chokepoint, and why it matters to your energy bill
The numbers behind the Strait of Hormuz disruption are genuinely staggering.
In 2025, approximately 13 million barrels of oil transited the strait daily, accounting for nearly 31% of all maritime crude shipments, according to energy consultancy Kpler data cited by CNBC. Iran’s Revolutionary Guards commander declared the strait closed on March 2, warning that any ship attempting to pass would be set on fire, according to Times of Israel.
Brent crude closed above $100 a barrel on March 12 for the first time since August 2022, surging 9.2% in a single session as tanker attacks broadened across the Arabian Gulf, according to Bloomberg. On Monday, March 15, Brent briefly spiked to around $106 a barrel following fresh U.S. strikes on Kharg Island, according to Trading Economics.
Here is what that translated to at the pump.
- Gasoline prices nationally hit a national average of $3.79 per gallon as of March 17, the highest since October 2023, according to CNN
- U.S. West Texas Intermediate crude rose 3.7% to trade around $97 a barrel on Tuesday, while Brent remained above $100
- Since the conflict began Feb. 28, Brent has surged more than 38% and WTI has climbed roughly 40%, according to Reuters
- Shipping activity through the Strait has been largely suspended, with tankers stranded and fears of attack keeping vessels out, according to the New York Times
- The LNG disruption hit Qatar hard, which routes nearly all of its supply through the Strait, according to TheStreet
The Stimson Center noted that a serious Hormuz disruption could remove 8 million to 10 million barrels per day from world supply, a scale large enough to overwhelm any available spare capacity elsewhere.
Morgan Stanley’s warning the rally may not stick yet
Not everyone is ready to call the all-clear.
Morgan Stanley’s chief U.S. equity strategist Mike Wilson told CNBC’s “Squawk Box” on Monday that the S&P 500 could still dip to around 6,300 by early April, roughly 5% below where the index closed the prior Friday, before any more durable recovery takes hold.[4]
“There’s risk around, still around oil. There’s Fed uncertainty… so that could weigh on some of the lower parts of the market in the short term,” Wilson said.
His concern is not that the bull market is over. Wilson believes the current decline is “mature in time and price,” pointing out that half of the Russell 3000 constituents are already down at least 20% from their peaks. That is a correction working through the system, not a collapse.
On the other side of the ledger, Wilson’s own Morgan Stanley outlook page acknowledged that a sharp and persistent rise in oil prices poses the most direct risk to the duration of the business cycle, and that stocks could struggle into April as a result.
The stocks Wilson’s team still likes during this stretch include Walmart, Delta Air Lines, and Northrop Grumman, which has surged more than 8% in 2026 as demand for defense contractors has climbed alongside the war.
What this means for your portfolio right now
Here is the practical reality.
The S&P 500 entered 2026 near 6,857, and as of March 12 it was trading around 6,684, down about 2.5% year to date but up approximately 19% year over year, according to Capital.com’s S&P 500 outlook. Monday’s rally helped, but the index remains below all its short-term moving averages.
The Federal Reserve’s meeting on March 17 and 18 will be the next major catalyst. Markets currently price nearly zero chance of a rate cut at this meeting, with the CME FedWatch tool showing roughly 4.7% odds of a cut as of mid-March. The base case for the first cut has now shifted to September 2026.
Goldman Sachs projected the S&P 500 would deliver a 12% total return in 2026 as of January, driven by 12% earnings-per-share growth, according to Goldman Sachs Research. That projection was made before the Iran war added an oil wildcard to the equation.
The harder question is not what Wall Street thinks. It is what you do with that volatility when it lands in your account.
Historical data shows the S&P 500 has, on average, been higher one, three, six, and twelve months after comparable geopolitical shocks, according to Capital.com’s analysis. That pattern may not repeat perfectly with today’s elevated valuations and oil price pressures, but it suggests that panic selling during the worst of the Iran headlines would have cost you Monday’s recovery.
If you own a diversified portfolio and did nothing during the last three weeks of volatility, you are approximately back to where you were before the war premium hit hardest.
That is not a glamorous outcome. But it is exactly what patient investing is supposed to look like.
Related: Veteran analyst sends blunt message on Nvidia stock after GTC
