SpaceX is boldly going where few have gone before. On its third day as a public company, its market value is poised to overtake that of Amazon. The momentum is being driven by both retail excitement and a looming wave of buying as it enters some indexes. Following Monday’s Iran peace rally, stock futures are mixed this morning and oil is down some more.
How times have changed
We’ve all heard the line about what happens to those who fail to learn the lessons of history. What if we learn the wrong ones?
Past geopolitical shocks provided a faulty playbook for how assets behaved during the three-and-a-half month conflict with Iran. One reason is that there aren’t that many Middle East wars to study and the world economy has changed. How markets were behaving before the war mattered too.
Oil prices jumped this time, of course, but not by that much considering that nearly as many barrels a day of supply were lost as during the Arab Oil Embargo, Iranian Revolution and First Gulf War combined. During those episodes in 1973, 1978 and 1990, crude prices rose about 300%, 160% and 130%, respectively.
Other than a brief spike in the early days, moves in oil prices have been surprisingly tame. Benchmark futures were about 21% higher Friday than they were in late February, already reflecting peace expectations.
The oil market was clearly glutted before the war. Chinese stockpiling and anxiety about Iran kept prices higher than they might have been. Without that, and then a slowdown in Chinese buying, they might have risen by more from a lower base and there would have been less supply to cushion the blow.
There also weren’t strategic petroleum reserves during the 1970s oil crises. Refilling them will now affect the market too.
Meanwhile, gold and silver failed to live up to their haven roles, falling by about 20% and 25%, respectively. A big reason: Precious metals already had enjoyed a historic rally in 2025 and early 2026, before hostilities broke out.
Bond yields and the dollar acted more like the playbook suggests, both rising. Energy shocks are inflationary, and the U.S. Treasury market is a traditional haven during wars, boosting the greenback.
But the dollar’s strength this time might owe more to the U.S. being far more energy independent than Europe and Asia. Foreigners have sold Treasurys recently. With the U.S. running a massive budget deficit and borrowing at worrisome levels, the rise in yields also reflects anxiety about America’s fiscal trajectory.
And stocks? Well, we’re in a bull market. The respective 8% and 14% rallies in the S&P 500 and Nasdaq composite from the start of fighting through Friday can mostly be explained by enthusiasm about AI and the companies playing a starring role in the boom. Optimism matters.
So does time. Just as it’s important to know what was happening before the war, it’s premature to gauge the impact of its massive disruption. A stock chart that’s higher today doesn’t tell us about the longer-term impact on economic growth, borrowing costs or corporate earnings.
Past Middle East crises all preceded stock slumps and recessions. Let’s hope history doesn’t rhyme.
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Stocks I’m Watching
↗️ SpaceX: Shares of Elon Musk’s rocket company are poised for another day of gains, following a two-day rally that pushed the stock up about 43% from its IPO price. Shares advanced 9% premarket.
↗️ Go Inc.: Shares of the ride-hailing app jumped 10% in their Tokyo trading debut after Japan’s largest initial public offering of the year so far.
↗️ Qualcomm, Micron Technology: Shares of chip makers looked set for further gains today, following a rally yesterday that sent the PHLX Semiconductor Index up more than 5%. Other stocks tied to AI, including Sandisk (SNDK) and Super Micro Computer (SMCI) also rose premarket.
↘️ Dave & Buster’s: The arcade-restaurant operator reported a lower profit and falling revenue in the first quarter. Shares dropped 14% in thin premarket trading.
↘️ Occidental Petroleum, Halliburton, Chevron: Shares of energy companies extended declines premarket amid a continued fall in oil prices.
One Big Chart
Status symbols are an odd thing and something is going on in the luxury handbag business. After years of explosive growth, shoppers are slipping away.
What I’m Reading
The Bank of Japan raised interest rates to a 31-year high, anchoring policy against the inflationary risks of a spike in energy costs caused by the war with Iran. (WSJ)Qualcomm looks like a rare AI chip value play. (WSJ)Consumer spending in China declined last month for the first time in more than three years and investment contracted further, highlighting how the world’s second-largest economy has become increasingly lopsided. (WSJ)The Justice Department’s decision to allow Paramount deal surprised staff investigators. (WSJ)A new book looks at the 19th Century railroad boom, often compared with AI today, and the Panic of 1873 as it went off the rails. (The New Yorker)
Today in Markets History
📰 On this day in 1812, the State of New York chartered a new institution called City Bank of New York, capitalized at $2 million. Today, it’s the global bank Citigroup.
Beyond the Newsroom
WSJ | Buy Side: Refinancing your auto loan with good credit might save you money, but longer terms can wipe out the savings.
About Me
Business and finance have fascinated me for a long time. Before writing this newsletter, I edited The Wall Street Journal’s Heard on the Street team for a decade, wrote two investment books and managed a team of stock analysts at a global investment bank.
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