S&P 500: Deutsche Bank notes new peak following geopolitical rebound

S&P 500 Surges Past Previous Lows to Achieve New Records

Analysts at Deutsche Bank note that the S&P 500 has made a remarkable comeback since hitting an eight-month low on March 30, climbing more than 10% and closing above 7,000 for the first time. This swift rebound is described as a more volatile version of the typical response to geopolitical events, with the initial downturn being deeper and lasting longer than usual, but the subsequent recovery occurring at a faster pace. Robust performance in technology and consumer cyclical sectors, along with encouraging bank earnings, have contributed to the strength of US equities.

US Markets Continue Upward Momentum After Recent Setback

“When I left for vacation, the S&P 500 had closed at 6,343.7, marking its lowest point in eight months. Just 11 trading days later, the index finished above 7,000, up 0.80% at 7,023—a gain of 10.71% and a new all-time high. At the time, few expected such a rapid turnaround, but this period has followed a pattern seen in geopolitical shocks, where the negative effects typically last around 15 days and recovery takes another 15 to 20 days.”

“In this instance, the drop was more severe than three-quarters of historical cases, and the lowest point arrived a week later than average. However, the bounce back was quicker by about a week, demonstrating that the usual geopolitical recovery pattern has generally held true.”

Technology and Consumer Sectors Lead Gains

“Not only did the S&P 500 set a new record, but the Nasdaq also rose by 1.59% to reach its own peak, with the ‘Mag 7’ stocks outperforming at 2.48%. The S&P’s advance was driven by strong results in technology and consumer-focused cyclical industries, including Autos (+6.59%), Software (+4.29%), Tech Hardware (+1.57%), and Consumer Services (+1.42%). Meanwhile, sectors tied to commercial activity, such as Capital Goods (-1.73%) and Materials (-1.29%), lagged behind.”

Positive Earnings and Global Developments Bolster US Stocks

“Amid ongoing news from the Middle East, upbeat earnings reports have further supported US equities. Morgan Stanley climbed 4.52% and Bank of America gained 0.97% following their latest financial results. These positive surprises have reinforced confidence in the resilience of the US economy, even as energy prices have recently spiked.”

(This article was produced with assistance from an AI tool and reviewed by an editor.)