It has been over a month since tensions erupted in the Middle East, and something quite interesting is happening on Wall Street: the S&P 500 has recovered all its losses and continues to rise. In fact, it has gained nearly 10% since the end of March, while the Nasdaq 100 is even stronger with a 12% increase. The most curious thing is that the market seems to have decided that it has already won the battle with Iran, even though the conflict technically still exists.

Rich Privorotky from Goldman Sachs summarized it well: the market declared victory while the conflict is not truly over yet. What surprises him is that Iran has not escalated the situation much, the Houthis have not intensified attacks in the Red Sea, so Wall Street simply decided to look ahead. Chris Hussey from Goldman put it more directly: a month ago, it was unthinkable for the S&P 500 to rise 1.6% this year, but stocks are forward-looking instruments; they cannot wait for a problem they know will eventually be resolved to be resolved.

The fascinating thing is to see how money moves. CTA funds are buying like crazy, short positions are closing rapidly, and the technology sector leads everything. The Mag 7 has gained 15% in the last 10 days, and the chip sector is the engine of this rally. NVIDIA and Micron alone are expected to contribute more than 50% of the S&P 500 earnings growth this quarter, according to Goldman.

Meanwhile, other assets are also gaining momentum. Bitcoin surpassed $76,000, gold is trading above $4,800, and bond yields fell between 3 and 4 basis points. Market liquidity returned to normal: ETF volume dropped from 50% to 29% of the total.

But here’s the interesting part: there is a clear divergence between the stock market and the oil market. WTI fell below $91, and traders are betting it will drop below $90 before the end of the month. While the S&P 500 shouts victory, the oil market continues to wait because it understands that supply disruptions will take longer to resolve.

This week, results came out from JPMorgan, Citigroup, Wells Fargo, and BlackRock. The banking sector shows that despite concerns about inflation, AI, and consumer spending, households and businesses remain solid. March’s PPI came in below expectations at 0.5% month-over-month, although some strategists warn that the market interprets these data as lagging.

However, not everyone is celebrating. Lori Calvasina from RBC Capital Markets warns that if the narrative about the war changes, the S&P 500 still has room to fall and could do so more strongly than before from a valuation perspective. Mark Hackett from Nationwide is skeptical that the index will break all-time highs before substantial progress in negotiations. Bond strategists also remain skeptical, saying it will be difficult to see lower inflation in future reports.

Ed Yardeni is more optimistic: he believes that, just as with Russia-Ukraine, markets will learn to coexist with a war in Iran. His thesis is that the S&P 500 already hit bottom on March 30.

The logic is clear: the stock market already prices in a resolution, but oil still waits. Two different narratives of the same problem.