Global markets are being pulled in two directions as the Iran war intensifies, raising questions about how Iran war affects the stock market in 2026. Crude oil prices have surged back above $100.00 per barrel amid escalating geopolitical tensions, yet the Toronto Stock Exchange (TSX) and S&P 500 continue to show surprising resilience.
As investors weigh the risks of prolonged conflict against strong earnings and economic momentum, the big question is: can this stability last?
How Are the TSX and S&P 500 Performing Amid the Iran War & Rising Oil Prices?
Crude oil prices jumped back above $100.00 per barrel on April 13 even though 21 hours of negotiations between Iran and the U.S. failed to result in a ceasefire or an end to the war. Instead, Iran and the U.S. continue to threaten each other, with President Donald Trump ordering the blockade of the Strait of Hormuz and Iran threatening to retaliate against ports in the Mideast.
While the price of crude oil remains volatile and fears of inflation persist, U.S. and Canadian stocks remain stable—highlighting the impact of oil prices on the TSX and S&P 500 during periods of geopolitical stress.
North American stocks are still down from when the war began on February 28, but they have staged a big comeback since bottoming in mid-March. The TSX needs to climb approximately 2.5% to reach its late February record highs, while the S&P 500 needs to advance roughly two percent to reach its pre-war levels.
The resilience of the TSX and S&P 500 despite failed negotiations and rising tensions in the Strait of Hormuz suggests that investors still expect a near-term resolution—one that could support the global economy.
The TSX and S&P 500 are also holding steady in light of a strong earnings season. Big banks, including Goldman Sachs, reported better-than-expected earnings. Energy companies are also performing well on higher crude oil prices.
Why Are Investors Staying Optimistic Despite Rising Risks?
North American stocks could also be holding steady because history shows that it doesn’t pay to sit on the sidelines. This has held true even in the opening years of the 2020s. So far, there have been four major economic crises: the pandemic, Russian invasion of Ukraine, Trump’s global tariff wars, and war in Iran.
The TSX and S&P 500 slid at the start of each crisis, but quickly erased those losses, climbing to record highs—something investors are watching closely again as they assess how the Iran war’s affecting the stock market in 2026.
Since the start of 2020 the TSX has advanced 98%, while the S&P 500 is up 111%. The technology-heavy Nasdaq, meanwhile, has climbed 156%. Again, the TSX and S&P 500 have not fully recovered from where they were at the start of the Iran war, but the indices are within striking distance of fresh highs.
Now, some investors may have unchecked faith in the stock market, but history shows that it pays to be mindful and willing to rebalance one’s portfolio. There’s only so much central banks can do to support the stock market and economy.
It’s also important to remember that the stock market is comprised of individual and institutional investors, and when the herd mentality changes, the direction of the stock market can reverse quickly.
Optimism abounds with the Iran war, but even when it is resolved, oil prices are expected to remain elevated. Demand for crude continues to grow, and it could take years to repair damaged energy infrastructure in the Middle East.
That might be good news for oil and gas stocks, but higher crude prices will result in higher gas prices and higher inflation—underscoring the broader impact of oil prices on the TSX and S&P 500 and the economy.
That will cut into budgets and household spending and corporate profits. And not all stocks will perform well in this environment.
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