New York —  

Markets just had a month of seemingly contradictory results. The S&P 500 just had its best month in nearly six years, even though oil prices have surged back above $100 per barrel and bond yields have climbed.

Stocks are forward looking and trying to see past the war with Iran. But energy prices have spiked and borrowing costs have risen while the Strait of Hormuz, a key waterway for crude, remains effectively closed. Here’s what to know:

Stocks

The S&P 500 soared more than 10% in April and hit seven record highs after tumbling in March. It was the index’s best month since November 2020.

The rebound was driven in part by robust corporate earnings and optimism about the US-Iran ceasefire. The stock market is looking past the war because of resilience in US corporate profits.

Investor enthusiasm for the AI boom also helped the rally. The tech-heavy Nasdaq soared 15% in April and had its best month in six years.

Other factors are at play, too. Algorithmic trading systems can kick in automatically at different levels, contributing to the swift rebound. Wall Street traders have also been eager to buy the dip in hopes of not missing a rally.

“Corporate fundamental strength has overshadowed and offset uncertainty stemming from the Middle East conflict, the potential for higher inflation and questions around policy direction,” said Bill Merz, head of capital markets research at US Bank Asset Management.

“That corporate earnings story has been so strong—that’s the headline in my mind of why the market is trading the way that it is,” Merz added.

Risks remain: The longer the war with Iran drags on, the more concerns could arise about inflation or a hit to growth.