The Iran Conflict
through the lens of the S&P 500
S&P 500 — daily close
Each annotated event shows where the market actually was, not where the headline said it should be.
SP500 · Mar 13–Apr 14 partly estimated (see Uncertainties)EnergyXLE · 3.5% of S&P+4.2%peak +18.0%
What pushed it up
Brent crude spiked to ~$120-150/bbl on Strait of Hormuz closure fears; refiners and integrated oil majors saw record cash-flow projections; LNG names benefited from Iran’s strikes on Qatar’s Ras Laffan facility.
What pushed it down
Ceasefire reports and renewed US-Iran talks (mid-April) compressed the war premium; XLE has since given back roughly two-thirds of its conflict-driven gains.
Key holdings
Industrials & DefenseXLI / ITA · 8.7% of S&P+8.5%peak +14.7%
What pushed it up
Congressional $45B emergency defense supplemental, accelerated F-35 / Patriot / THAAD orders, and classified contracts for the operation drove RTX +22%, LMT +19%, NOC +17% at peak. Drone names like AeroVironment up 10%+ on Day 1.
What pushed it down
Airlines dragged the sector hard: jet fuel +31%, Middle East route suspensions hit UAL/DAL/AAL by 19–24% peak-to-trough. Logistics names (FDX, UPS) also softer on fuel costs.
Key holdings
MaterialsXLB · 1.9% of S&P+6.4%peak +9.0%
What pushed it up
Gold above $3,100/oz (Newmont +21%, Barrick +18%) drove precious-metal miners. Industrial metals also bid as supply chain re-routing (Hormuz closure) lifted shipping/strategic-metal premia.
What pushed it down
Chemical names (DOW, LYB) faced cost-push inflation from naphtha/feedstock spikes. Some demand-destruction concerns on construction materials as rates stayed elevated.
Key holdings
Information TechnologyXLK · 32.5% of S&P+5.9%peak +5.9%
What pushed it up
Megacap tech (NVDA, MSFT, AAPL) acted as defensive ‘cash-rich’ havens; AI capex narrative remained intact and investors used the sell-off to add to the bull-market leaders. Semis benefited from continued sovereign AI spend.
What pushed it down
Software underperformed (CRM, WDAY both -10%+) on AI disruption fears, separate from the conflict. Hardware exposed to Asia supply chain saw modest pressure on shipping risk.
Key holdings
Communication ServicesXLC · 9.3% of S&P+3.5%peak +3.5%
What pushed it up
Alphabet and Meta proved resilient as digital-ad budgets held; investors treated cash-rich platform names as a quasi-safe-haven within growth.
What pushed it down
Travel-adjacent ad spend softened; international media (NFLX, DIS) flagged guidance risk on slower global growth from the IMF’s revised 3.1% forecast.
Key holdings
FinancialsXLF · 13.2% of S&P+1.8%peak +2.5%
What pushed it up
Big banks beat Q1 earnings (BNY Mellon +1.3% on print, JPM/WFC strong); higher rates from the inflation re-acceleration helped NII. Trading desks benefited from elevated volatility.
What pushed it down
Charles Schwab fell ~4% on weak results; recession fears and credit-quality concerns weighed on regional banks; insurance names hit on potential war-related claims exposure.
Key holdings
Health CareXLV · 10.1% of S&P-1.2%peak +1.0%
What pushed it up
Defensive pharma (LLY, JNJ, ABBV) attracted some risk-off flows during the early March sell-off.
What pushed it down
Abbott Labs −4% on weak guidance; Novo Nordisk slid ~21% on GLP-1 outlook concerns (LLY also pressured); Q1 earnings flagged headwinds from a stronger dollar and slower European volumes.
Key holdings
Consumer StaplesXLP · 5.4% of S&P+0.5%peak +3.0%
What pushed it up
Classic defensive bid in early March (PG, KO, WMT) as VIX ran into the high-20s; PepsiCo +0.3% on Q1 beat helped sentiment.
What pushed it down
Faded as the equity rally broadened; input-cost inflation (oils, transport) hit margins for packaged-food names.
Key holdings
Consumer DiscretionaryXLY · 10.5% of S&P-8.5%peak -12.3%
What pushed it up
Amazon recovered modestly into April on cloud/AI strength; off-price retail (TJX, ROST) acted defensively.
What pushed it down
Hardest-hit S&P sector. Tesla −18.6% (EV demand + executive controversy + boycotts). Carnival −27.4% as Mediterranean cruise bookings collapsed. Airlines (in XLI) cratered. Consumer confidence fell on $5+/gal gasoline in many states.
Key holdings
UtilitiesXLU · 2.5% of S&P+2.1%peak +4.5%
What pushed it up
Defensive yield rotation early in the conflict; AI-power names (CEG, VST) continued their structural bid as data-center demand thesis held.
What pushed it down
Gave back gains as 10-year Treasury yields ticked up on inflation prints; rate-sensitive regulated utilities lagged the AI-power names.
Key holdings
Real EstateXLRE · 2.1% of S&P-0.5%peak +1.5%
What pushed it up
Data-center REITs (EQIX, DLR) continued benefiting from AI infrastructure demand; cell tower names (AMT, CCI) defensive on yield.
What pushed it down
Rate-sensitive sub-sectors (mortgage REITs, office) hit by the inflation re-acceleration; commercial real estate concerns persisted.
Key holdings
What unwinds, what lifts
Resolution = ceasefire holds, Strait of Hormuz fully reopens, oil normalises toward $70-80 Brent.
Uncertainties
- Mid-March daily prints. FRED’s machine-readable feed currently extends through 12 Mar 2026. Daily closes between 13 Mar and 31 Mar in the chart are reconstructed from the 24 Mar reference point (S&P 6,556) and the 18 Mar period low (~6,316.91 per the Investing.com 52-week range). Direction and magnitude are anchored to verified data, but day-to-day path is approximate.
- Sector returns. Reported as cumulative price moves from the 27 Feb pre-strike close to the 16 Apr close. Sources blend ETF prices (XLE, XLK, XLV…) with mid-conflict commentary (FactSet, Investing.com, CNBC, Middle East Insider). My weighted-sector aggregate (+2.55%) reconciles to the actual S&P move (+2.36%) within ~20 bps — adequate for relative ranking but not exact.
- Conflict status. As of publication, a two-week ceasefire is reported as “holding”, but the Strait of Hormuz remains partially blocked and no formal peace agreement has been signed. The “recovery” framing assumes the ceasefire endures. A renewed escalation likely re-prices the energy/defense spread and resets the discretionary trade.
- Earnings season overlay. Q1 prints from megacap tech (NFLX, MSFT, GOOGL, META) land in the next 2 weeks and may dominate sector attribution short-term, partially independent of the conflict trajectory.
- Inflation pass-through. March CPI ran 3.3% (highest since May 2024). It is unclear how much of the March print reflects energy spike vs. broader services-side stickiness. The Fed’s reaction function under either scenario is a meaningful swing factor.
This report is provided for educational and informational purposes only. It is not financial, investment, tax, or legal advice and should not be relied upon to make any investment decision. All figures, attributions, and forward-looking statements are illustrative interpretations of public data and are subject to revision; some intra-conflict daily values are estimated as noted in Uncertainties. Past performance is not indicative of future results. Consult a licensed financial advisor before acting on any of the ideas presented here.