Despite a roughly 4% slide in the S&P 500 from its January peak through mid\u2011March, U.S. equities have shown surprising headline resilience since the Iran war began.<\/p>\n\n\n\n
Yet if the current episode follows the historical template, investors need to understand what that template actually delivered \u2014 not just in the weeks immediately after each shock, but over the full arc of each episode.
The data suggests the market may be only in the early innings of the repricing.<\/p>\n\n\n\n
In a report shared Monday, Goldman\u2019s equity strategy team reviewed four severe oil supply shocks of recent decades and measured their impact on the S&P 500 both during the oil price spike and on a peak-to-trough basis across the full episode.<\/p>\n\n\n\n
The picture that emerges is not a story of brief volatility followed by quick recovery.<\/p>\n\n\n\n
It is a story of drawn-out, compounding market damage that played out over months.<\/p>\n\n\n\n
\u201cThe S&P 500 declined by a median of 12% alongside rising oil prices during the oil price spikes in 1974, 1980, 1990, and 2022, and su\ufb00ered a median peak-to-trough decline of 23% around those episodes,\u201d Ben Snider, a Goldman Sachs equity analyst, said.<\/p>\n\n\n\n Past performance is not indicative of future returns.<\/em><\/p>\n\n\n\n The median peak-to-trough decline across those four episodes was 23%. The average was 27%. <\/p>\n\n\n\n The mildest \u2014 the Iranian Revolution episode \u2014 still ended in a 17% drawdown, even though the S&P 500 initially rose 6% during the oil price spike itself, carried higher by the Federal Reserve\u2019s accommodative stance at the time.<\/p>\n\n\n\n The market eventually paid for that accommodation in 1981, when tightening to crush entrenched inflation sent stocks sharply lower. <\/p>\n\n\n\n The current episode has produced a peak-to-trough decline of just 4%. Oil prices, though, have already risen 68% from their pre-war level \u2014 meaning the magnitude of the supply shock is already comparable to the Ukraine war of 2022, which ultimately delivered a 25% drawdown over its full arc.<\/p>\n\n\n\n And the Iran disruption, unlike Russia\u2019s, carries a geographically unique dimension: Iran controls the Strait of Hormuz \u2013 the critical maritime chokepoint responsible for more than 20% of global crude supply. <\/p>\n\n\n\n Goldman\u2019s base case is not a bear market. <\/p>\n\n\n\n The bank maintained its year-end S&P 500 target of 7,600, even while lowering its P\/E multiple assumption to 21x from 22x.<\/p>\n\n\n\n The thesis rests on two pillars: AI-driven earnings growth \u2014 which Goldman estimates will contribute roughly one-third of S&P 500 EPS growth this year \u2014 and the belief that the disruption at the Strait of Hormuz will prove temporary, with flows gradually resuming over the coming weeks.<\/p>\n\n\n\n But Goldman also modeled two adverse scenarios that investors need to hold alongside the base case. <\/p>\n\n\n\n In a moderate growth shock \u2014 where the market prices in a substantially worse economic outlook \u2014 the bank estimates the S&P 500 would fall to 6,300, a decline of roughly 7% from current levels and consistent with a P\/E multiple of 19x.<\/p>\n\n\n\n In the most severe scenario, in which a 60-day disruption to the Strait of Hormuz lifts oil to a March average of $145 a barrel \u2014 Goldman puts the S&P 500\u2019s downside at 5,400 \u2014 a 20% decline from current levels that would bring the multiple to 16x.<\/p>\n\n\n\n —<\/p>\n\n\n\nEvent<\/th> Start<\/th> Oil Peak<\/th> Months<\/th> Oil Rise %<\/th> CPI at Start<\/th> S&P During Spike<\/th> Peak\u2013Trough Decline<\/th><\/tr><\/thead> Arab oil embargo<\/td> Sep 1973<\/td> Jun 1974<\/td> 9<\/td> +265%<\/td> 7.4%<\/td> (21%)<\/td> (44%)<\/td><\/tr> Iranian Revolution<\/td> Jan 1979<\/td> Apr 1980<\/td> 15<\/td> +166%<\/td> 9.3%<\/td> +6%<\/td> (17%)<\/td><\/tr> Iraqi invasion of Kuwait<\/td> Jun 1990<\/td> Oct 1990<\/td> 4<\/td> +172%<\/td> 4.4%<\/td> (17%)<\/td> (20%)<\/td><\/tr> Russo-Ukrainian war<\/td> Dec 2021<\/td> Mar 2022<\/td> 3<\/td> +85%<\/td> 6.8%<\/td> (8%)<\/td> (25%)<\/td><\/tr> Average<\/td> \u2014<\/td> \u2014<\/td> 8<\/td> +172%<\/td> 7.0%<\/td> (10%)<\/td> (27%)<\/td><\/tr> Median<\/td> \u2014<\/td> \u2014<\/td> 7<\/td> +169%<\/td> 7.1%<\/td> (12%)<\/td> (23%)<\/td><\/tr> Current episode<\/td> Jan 2026<\/td> Mar 2026<\/td> 2<\/td> +68%<\/td> 2.7%<\/td> (4%)<\/td> (4%)<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n Could This Time Be Any Different?<\/h2>\n\n\n\n