A two‑week truce between the US, Iran and Israel opened the Strait of Hormuz, sending oil prices plummeting and lifting Asian stocks. Markets still doubt analysts’ rosy earnings forecasts, which project a 13% rise in S&P 500 earnings for Q1 and 19‑21% growth in later quarters.

FactSet’s projections clash with a 5% decline in the S&P over the past six weeks, prompting concerns that investors are underpricing sustained high energy costs. The war’s escalation could keep oil high, stalling growth and nudging the U.S. toward a 2026 recession with odds rising to 35%.

Meanwhile, job‑market chatter about AI has stalled. Recent‑grad unemployment sits at 5.6%, higher than the 4.2% overall rate, yet the divergence from non‑graduate workers remains muted, suggesting AI’s impact is still nascent.

Analysts warn that a sharp oil shock could trigger credit and labor market volatility, potentially tipping the economy into a downturn. The risk of a recession now sits higher, demanding tighter scrutiny of earnings assumptions.