The S&P 500 index has experienced a robust rally, closing up 1.18% and nearing its record high from late January, after rising in 9 of the last 10 sessions and gaining 9.8% over that period, according to Deutsche Bank economists [1]. This marks the fastest 10-session gain since the post-Covid bounceback in April 2020 [1]. The rally is attributed to easing geopolitical fears, lower oil prices, and improved risk sentiment, with volatility indicators such as the VIX falling to 18.36 points, its lowest since late February, and US high-yield credit spreads tightening to 268 basis points, the lowest in two months [1].
The rally was broad-based, with the 'Magnificent 7' stocks surging 5.49%—their strongest performance in two weeks—while the small-cap Russell 2000 advanced 1.32% [1]. Consumer cyclicals, including Media (+3.5%), Autos (+3.4%), and Consumer Discretionary Retail (+2.8%), outperformed, whereas Energy (-2.2%) and Banks (-0.9%) lagged [1].
Danske Bank's research highlights that global equities extended gains, pushing the MSCI World index above pre-war levels, supported by strong earnings revisions [2]. Growth and cyclical stocks outperformed value and defensives, with global growth stocks beating value by more than 1 percentage point and cyclicals outperforming defensives by a similar margin [2]. Over the past seven days, growth stocks are now 3 percentage points ahead of value stocks [2].
While the US typically outperforms Europe and Nordic markets in such risk-on environments, Danske Bank notes that the peace trade was stronger in Europe and Nordics due to their greater exposure to Iran-driven energy prices, which offset the usual cyclical growth stock preference [2]. Small caps also performed well, with the Russell 2000 outpacing the S&P 500 and Nordic small caps showing meaningful gains [2]. US and European futures were reported as little changed the following morning [2].
CONCLUSION
Both Deutsche Bank and Danske Bank attribute the equity rally to easing geopolitical tensions and lower energy prices, which have boosted risk sentiment and supported both US and global markets. The rally has been broad-based, with growth, cyclical, and small-cap stocks outperforming, and volatility measures declining. The market takeaway is a strong risk-on environment, with investors responding positively to the improved outlook.