The S&P 500 has erased every point lost since the war in Iran began. The index rallied above 6,900 Tuesday, surpassing its Feb. 27 close and wiping out seven weeks of war-driven losses in a recovery as swift as the selloff itself.

The SPDR S&P 500 ETF Trust ( SPY ) — on track for its ninth positive session in the last 10 — is up 0.40% to 6,913 at last check.

From a peak above 6,950 in late January, the index collapsed to a low near 6,350 as the Strait of Hormuz closure sent oil above $100 and repriced inflation, growth and Fed expectations all at once.

The recovery has been equally sharp: seven straight weeks of losses, erased in ten sessions. Meanwhile, the Nasdaq 100 is heading for its tenth consecutive gain — the longest winning streak since 2021.

Chart: S&P 500 Fully Recovered From War-Related Losses

What The Rally Is Pricing In

David Morrison, senior market analyst at Trade Nation, said markets across the board — the S&P 500, Nasdaq, Russell 2000 and Dow — are now well above levels seen just before the conflict began in late February, and all are within easy reach of their all-time highs.

The S&P 500 sits just 1.7% below its record intraday high from January, according to Morrison. He noted that the steep backwardation in crude oil futures — where near-term prices trade well above longer-dated contracts — signals that markets expect oil prices to fall as the conflict resolves.

“Investors believe that the war will end soon, although whether that means in a couple of days, weeks or months isn't yet clear. What is clear is that the markets don't believe it will take years, and the steep backwardation in crude oil prices supports this view,” he said.

“While it would still take years to repair the damage to the Gulf States caused by the war and rebuild oil reserves, news of an end to hostilities is widely considered likely to trigger a strong rally across risk assets,” he added.

The Inflation Picture Behind The Move

Tuesday’s producer inflation data reinforced the bid. The Producer Price Index for final demand rose 0.5% in March — matching February’s pace and missing the 1.1% consensus by a wide margin.

More importantly for the rally, core PPI, which strips out food and energy, rose just 0.1% on the month, slowing from 0.3% in February.

Chris Zaccarelli, chief investment officer at Northlight Asset Management, said the core PPI deceleration is the number that matters most for the market.

The fact that underlying inflation at both the consumer and producer level is running below 0.3% is good news, according to Zaccarelli.

Assuming the Strait of Hormuz can be returned to normal, he says, “the underlying trends heading into the Iran war make it much more likely that disinflation can continue and we should be able to price in rate cuts later this year.”

Goldman Sachs Shares Similar Baseline

According to Goldman Sachs Global Investment Research, the bank expects two 25-basis-point rate cuts in September and December, driven by a combination of rising unemployment and modest further progress on core inflation as tariff effects drop out of year-on-year comparisons.

Goldman raised its December 2026 headline Personal Consumption Expenditure (PCE) inflation forecast by 1 percentage point to 3.1% since the war began, but kept its core PCE – the Fed’s favorite inflation gauge – revision to a more modest 0.3 points, to 2.5% — a signal that the bank sees the energy shock as largely one-time rather than structural.

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