Most quick assessments of the impact of a continued US-Israel/Iran war work of reduced form responses to oil shocks. I’m not sure how equity market responses, quantitatively, fit in. However, I suspect that higher uncertainty and perceived risk may prove the catalyst for a sustained correction.
Here’s the latest available information on aggregate SP500 data:
However, aggregates hide a sharp division in price-forward earnings ratios:
Source: Yardeni, accessed 3/15/2026.
The SP500 price returns divergence is more clearly shown by comparing the two Bloomberg price returns index. The bulk of gains in SP500 over the past year has been associated with the Magnificent 7 — and yet currently the Magnificent 7 price index is down about 16% relative to last peak (log terms).
Black line is Bloomberg Magnificent 7 net return index, blue line is ex-Magnificent 7 net return index. Source: Bloomberg, accessed 3/15/2026.
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