US stock market record highs as corporate earnings outweigh petrol costs and weaker confidence

Despite costly petrol, weak consumer confidence and an ongoing US-Iran war, US shares kept rising. Wall Street largely focused on one issue. Investors tracked how much money companies generated. With profits still strong, many buyers accepted higher prices for stakes in US firms. That pushed the S&P 500 back into record territory.

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The recovery looked sharp after a rough patch for many investors. The S&P 500 slid almost 10% from its earlier peak last month. The index later regained the losses and moved higher again. On Wednesday, it ended at a record 7,137.90. The move again rewarded investors who stayed invested.

US stock market: how prices get set

Share prices shift every second for many reasons, often unclear. Over time, two drivers matter most. One is how much profit a company makes. The other is how much investors pay for each $1 earned. That second part often changes with interest rates and investor mood.

When fear dominated early in the war, shares fell. Traders worried oil could jump for a long time. That could have sent inflation through the global economy. Bond yields climbed as well. Higher rates tend to weigh on shares. Investors also feared central banks could not cut rates.

US stock market: war fears ease and oil steadies

Since late March, markets expected the United States and Iran to avoid a severe outcome. A ceasefire agreed earlier this month still held, though it remained fragile. Oil prices signalled the shift. Brent crude rose from about $70 before the war to $119. It later fell back near $100 on Wednesday.

The Strait of Hormuz stayed a key risk point for oil flows. Tankers use the route to leave the Persian Gulf. If Iran kept it shut, and if the U.S. Navy blockaded Iranian ships, global damage would follow. Buyers would lose supply and Iran would lose revenue. Thierry Wizman said, "By denying Iran its oil-related revenue, traders may be thinking that the economic war may be more effective in getting concessions from Irans regime than was the kinetic war only, and that this will end the war sooner, rather than later,\" according to Thierry Wizman, a strategist at Macquarie Group.

Traders also began pricing in possible US rate cuts later this year. CME Group data showed the odds stayed lower than before the war. Yet expectations shifted away from possible rate hikes. That change reduced one pressure point on shares. It also helped investors focus less on fear and more on earnings.

US stock market: profits support the rally

Profit reports helped explain the market’s strength. Just over 15% of S&P 500 firms posted first-quarter 2026 results. Most beat analyst forecasts. Companies ranged from Citigroup to J.B. Hunt Transport Services to UnitedHealth Group. FactSet said profits could rise about 14% year on year if estimates hold.

Results included a month of wartime conditions. Companies said they stayed alert to risks from fighting. Still, few reports showed clear earnings damage. Brian Moynihan said, \"we saw healthy client activity, including solid consumer spending and stable asset quality, indicating a resilient American economy.\" Surveys still showed many households worried about fuel and tariff-linked prices.

US stock market: analysts lift forecasts for 2026

Analysts raised outlooks after the war began. They expected S&P 500 profit growth to speed up to 20% in the second quarter. Delta Air Lines reported strong demand for work and holiday travel. PepsiCo kept its 2026 profit forecast. CEO Ramon Laguarta cited resilience in international business.

GE Vernova also updated expectations on Wednesday. The company said demand was rising for power tied to AI data centres. It raised its revenue forecast for the year. These updates added to the view that earnings stayed firm. That view helped justify higher valuations despite unsettled geopolitics and prices.

Risks remained for the US stock market. A fresh drop could follow if US-Iran talks failed and oil supplies looked threatened. If oil stayed high for long, company margins could narrow. Higher energy costs can also reduce household spending power. For now, stronger profits and calmer expectations kept shares supported.

With inputs from PTI