Today's powerful relief rally in the stock market was fueled by news that President Donald Trump intends to declare victory in the war with Iran, according to an article in this morning's Wall Street Journal. Around noon, the market moved higher still on a report that the President of Iran said his country is ready to end the war if the US agrees to its 5-point peace plan. Then, after the market closed, around 6:30 pm EST, Trump told reporters that the US would be leaving the war zone in 2-3 weeks. His press secretary announced that the President will deliver a formal Address to the Nation Wednesday night at 9:00 pm. He certainly won't be accepting the Iranian plan, and he seems ready to withdraw without Iran accepting his 15-point plan, which includes opening the Strait of Hormuz.
If Trump is declaring mission accomplished, then so are we regarding our stock market correction call. We will probably lower our recession odds from 35% back to 20% once we have a better handle on whether the conflict in the Persian Gulf is actually over. We reserve the right to change our minds as often as the President does. Nevertheless, we have maintained our 7700 S&P 500 year-end target and our commitment to our Roaring 2020s base case.
The S&P 500 jumped 2.91% today, and the Nasdaq soared 3.82% (chart). The former experienced a 9.1% pullback from its January 27 record high, while the latter fell 13.2% from its October 29, 2025 record high. The significant valuation-led sell-offs in both were moderated by the ongoing strength in corporate earnings expectations, as we've frequently observed.
Our favorite Bull/Bear Ratio dropped to 1.12 this week, down from 1.57 the previous week (chart). As we've noted before, such bearish sentiment readings are bullish from a contrarian perspective. So much pessimism usually instigates a surprisingly bullish government policy response and an unexpected rebound in stocks, as we saw today.
If the war is almost over, then the damage to the US economy is likely to be minor. The latest batch of economic indicators provides a snapshot of the economy's starting point heading into the negative energy price shock and offers early signals on how the shock may be transmitting through the economy.
Consider the following:
(1) JOLTS. Today's JOLTS report is for February, a month before the war started. From this report, we can see that labor demand and supply have weakened recently (see chart). Fed Chair Jerome Powell recently indicated that he isn't concerned about the labor market because he considers the current 4.4% unemployment rate as consistent with "maximum employment" in the current environment. We agree.
The JOLTS report showed that job openings remained around 7 million, or 90% of the number of unemployed workers (chart). The pace of hires did slow, but so did the pace of separations. Contrary to the widespread view that companies aren't hiring, the pace of hires was 4.8 million during February. On balance, companies are hiring to replace quits and offset layoffs.
(2) Consumer Confidence. The March Consumer Confidence Index (CCI) rose to 91.8, surprising to the upside and indicating that consumers felt somewhat better about present and expected economic conditions. Labor market perceptions within the CCI survey showed that the share of respondents saying jobs are plentiful edged up to 27.3%, but the share saying jobs are hard to get also rose slightly (chart).
We continue to believe that the current war in the Middle East is yet another test of the resilience of the economy, corporate earnings, and the stock market. We expect they will pass this latest test. So far, so good.