What Happens to Stocks During Wars — 80 Years of Data

This article was originally published on StockCram. Read the full breakdown with charts, timelines, and sector data →

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I’ve been getting the same question in my inbox all week: “Should I sell everything?”

Because that decision — more than anything — determines whether you miss the recovery.

With US-Iran tensions leading headlines in 2026, the anxiety is real. So I pulled 80 years of S&P 500 data across every major U.S. military conflict — from Pearl Harbor to the Russia-Ukraine invasion.

The answer surprised me.

Not because war was “good.” Because uncertainty was gone.

That single insight — that markets fear the buildup to war more than the war itself — changes how you read every conflict in the data.

The Data

Here’s what 80 years of market reactions actually show:

In 6 of 7 major military conflicts since 1941, the S&P 500 was higher 12 months after the conflict started — but the timing of the recovery is where things get interesting.

ConflictInitial Drawdown12-Month ReturnWorld War II-19.8%+15.5%Korean War-14.0%+28.8%Vietnam War-4.9%+10.2%Gulf War-19.9%+23.6%9/11 & Afghanistan-11.6%-16.8%Iraq Invasion-12.0%+30.1%Russia-Ukraine-5.3%+2.5%

Past performance does not indicate future results.

The sole exception? 9/11 — which coincided with the dot-com bust already in progress. The war amplified an existing downturn.

👉 See exactly when markets bottomed and how long each recovery took — the full breakdown covers all 7 conflicts with charts.

Why Markets Recover After War Begins

Financial historians call it the “uncertainty premium.” Markets struggle to price binary outcomes — will there be a war or not? Once military action begins, the biggest unknown resolves, and markets stabilize.

The Iraq invasion (2003) is the clearest example: the S&P 500 dropped ~12% during the months-long “will they or won’t they” buildup. Then the invasion started — and the market rallied ~30% over the next year.

This pattern shows up again and again across 80 years of data:

Pre-war fear → conflict stabilization → recovery. The pattern has repeated across every major conflict since WWII.

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If There’s One Thing Markets Consistently Get Right During War — It’s Sector Rotation

Across all seven conflicts, the same sectors won and lost:

Outperformers: Defense (LMT, RTX, NOC), Energy (XOM, CVX), Gold (GLD) Underperformers: Airlines (JETS), Consumer Discretionary (XLY), Import-Heavy Retail

In 2022 during Russia-Ukraine: Energy (XLE) surged +58% while the S&P 500 fell -19.4%. Lockheed Martin gained ~37%.

Here’s how that looked across all 7 conflicts:

Defense and energy outperformed in every major conflict since WWII. The consistency is striking.

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StockCram is not affiliated with any brokerage mentioned in this post.

What I’m Watching for Iran

The Gulf War (1990) is the closest template — oil-centered, Middle East-based, Strait of Hormuz implications. In 1990, the market fell 19.9%, oil doubled, then both reversed once Desert Storm began.

But 2026 is structurally different in ways that matter. The full analysis covers what’s changed — and what hasn’t.

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The full analysis covers all 7 conflicts individually, with recovery timelines, sector heatmaps, and the specific data on when markets bottomed:

👉 See the full 80-year breakdown before the next headline hits

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StockCram is an educational platform, not a broker-dealer, investment adviser, or financial institution. Historical data shown; past performance does not indicate future results.

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