4 reasons for investor optimism, despite the Iran war

Wall Street is starting to look past the war--and sees money to be made.

While everybody has been fixated on the war in Iran, a funny thing has happened in financial markets: The outlook improved. Yes, even with a war underway.

The disruption to oil flows in the Persian Gulf, and the subsequent surge in prices, is an obvious problem for some parts of the economy. The “ceasefire” President Trump declared on April 7 hasn’t solved that problem. The US blockade of Iranian ports that is now underway means that even Iranian oil isn’t getting to market. That could worsen the supply crunch. Plus, Iran could retaliate by attacking more energy infrastructure in the region.

Yet investors think each side has strong economic incentives to move past the war. The Iranian regime needs oil revenue, which it won’t get if the US blockade continues indefinitely. So it may have to agree to some kind of deal that reopens the Strait of Hormuz to tankers. Trump needs to show American voters some relief in energy prices. That may force him to make concessions to Iran, which in a way, he has already done by ending or at least postponing the bombing.

Beyond the war, investors like what they see. The S&P 500 stock index has recovered most of the losses caused by the war, and is now positive for the year. Investors are buying because they think future gains are coming and don’t want to get locked out. And Wall Street is getting re-enthused about the fundamentals behind rising stock values.

Here are four reasons 2026 could turn out to be a good year for investors, especially if the Iran war recedes.

Corporate profits are strong. This chart from investing giant BlackRock shows that expectations for earnings growth in 2026 have actually gone up since the war started. That’s true for the US market, for Europe, and for emerging markets, as well.

Source: BlackRock

Several factors are goosing the outlook.