S&P 500: Record highs after geopolitical recovery – Deutsche Bank

Deutsche Bank strategists highlight that the S&P 500 has rebounded sharply from its March 30 eight‑month low, rallying over 10% to close above 7,000 at fresh record highs. They frame this as a high‑beta version of the usual geopolitical playbook, with the decline slightly worse and longer than average, but the recovery faster. US equities are also being supported by strong technology and consumer cyclicals and positive bank earnings.

US benchmark extends post-shock rebound

"Just as I went on holiday, on March 30th the S&P 500 closed at 6343.7 and at an 8-month low. Fast forward 11 business days and we closed last night above 7,000 (+0.80% at 7,023) for the first time, some +10.71% higher and at record highs. Few would have believed this was possible at the time, but this episode has been a high beta version of the usual geopolitical playbook where the negative impact on average lasts 15 days and the full recovery usually takes another 15-20 days."

"In this example the decline was slightly beyond the 75th percentile through history and the trough took a week longer to arrive than the average but the recovery took a week or so less. However, the geopolitical playbook has broadly worked."

"As well as the new record for the S&P 500, the Nasdaq (+1.59%) reached a record of its own as the Mag 7 saw even larger gains (+2.48%). Technology and Consumer-oriented cyclicals drove the S&P gains again, with Autos (+6.59%), Software (+4.29%), Tech Hardware (+1.57%), and Consumer Services (+1.42%) the major outperformers, while commercial-oriented cyclicals lagged such as Cap Goods (-1.73%) and Materials (-1.29%)."

"Alongside the news from the Middle East, positive earnings helped to support US equities, with both Morgan Stanley (+4.52%) and Bank of America (+0.97%) advancing after their latest results. Coupled with other positive surprises, that’s helped to underscore the narrative of ongoing US economic strength, despite the recent surge in energy prices."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)