Wall Street has now fully wiped out the losses triggered by the start of the U.S.-Iran war. The S&P 500 closed at a fresh record of 7,022.95 after climbing 0.8%, while the Nasdaq also finished at a new all-time high. The move marks a sharp reversal from the panic that hit markets when the conflict erupted and oil spiked, briefly pushing the S&P down nearly 9% and dragging the Nasdaq and Dow into correction territory.

The rebound is being driven by one central bet, that the war will not spiral into a long-term economic shock. Investors have steadily moved back into risk assets as ceasefire diplomacy and renewed talk of negotiations eased fears of a worst-case energy crisis tied to the Strait of Hormuz. Oil is still elevated by prewar standards, but it has backed off its most extreme levels, helping calm inflation worries that had rattled markets just weeks ago. Brent settled around $94.93 a barrel and U.S. crude at $91.29, a sign that traders still see risk in the system but no longer expect a full-scale supply breakdown.

The rally is also being reinforced by earnings. Bank of America reported $30.3 billion in quarterly revenue and $8.6 billion in net income, while Morgan Stanley posted a strong first quarter that helped lift confidence across the financial sector. Reuters reported that executives at major banks described the American consumer as resilient and pointed to healthy trading, dealmaking, and a still-active pipeline for transactions and IPOs. In other words, the market is not just breathing easier on geopolitics. It is seeing corporate America continue to produce.

That does not mean the danger is gone. Traders are effectively pricing in de-escalation, and that leaves little room for a fresh shock. If negotiations collapse again, if Hormuz tightens, or if oil surges back toward crisis levels, the same market that raced to new highs could snap back just as quickly. For now, though, Wall Street’s message is clear: investors believe the war-driven selloff was temporary, and they are once again chasing growth, profits, and the next leg higher.