Equities Poised for Recovery as Iran War Risks Priced In

4 Beaten-Down ETFs Show Renewed Momentum Despite Lingering Geopolitical Uncertainty

Apr. 17, 2026 at 8:55am

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An extreme close-up of intricate, metallic banking machinery and equipment, conveying the robust and reliable nature of financial institutions.As geopolitical tensions ease, the financial sector's heavy, industrial infrastructure remains a steadfast symbol of economic security and stability.Washington Today

Despite the initial market reaction to the U.S. blockade of the Strait of Hormuz, equity investors have largely priced in geopolitical risks, with the SPDR S&P 500 ETF Trust (SPY) adding about 4% over the past week. Volatility-based ETPs like the Barclays iPath Series B S&P 500 VIX Short Term Futures ETN (VXX) have also lost around 8%, suggesting a decline in sensitivity to such developments. Analysts expect oil prices to eventually decline as tensions ease, and a possible resolution between the U.S. and Iran could quickly relax the current risk premium in energy markets.

Why it matters

The muted market reaction to the latest geopolitical tensions indicates that investors are becoming less sensitive to such developments, potentially signaling a shift towards a more stable and recovery-oriented phase for equities. This presents opportunities for investors to consider beaten-down ETFs that are showing renewed momentum, as the market appears to be pricing in the Iran war risks.

The details

The benchmark U.S. treasury bond yields rose from 4.29% on April 9 to 4.31% on April 10, but then fell to 4.26% on April 14 and recorded 4.29% at the close of April 15. This suggests that the initial market reaction has been relatively muted outside of the oil market. Additionally, the SPDR S&P 500 ETF Trust (SPY) added about 4% over the past week, while the Barclays iPath Series B S&P 500 VIX Short Term Futures ETN (VXX) lost about 8%, further indicating that equity investors have largely priced in the geopolitical risks.

  • On April 9, the benchmark U.S. treasury bond yield was 4.29%.
  • On April 10, the benchmark U.S. treasury bond yield rose to 4.31%.
  • On April 14, the benchmark U.S. treasury bond yield fell to 4.26%.
  • On April 15, the benchmark U.S. treasury bond yield recorded 4.29%.

The players

SPDR S&P 500 ETF Trust

An exchange-traded fund that tracks the S&P 500 index, one of the most widely followed benchmarks for the U.S. stock market.

Barclays iPath Series B S&P 500 VIX Short Term Futures ETN

An exchange-traded note that provides exposure to the S&P 500 VIX Short-Term Futures Index, which tracks the performance of a daily rolling long position in the first and second month VIX futures contracts.

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What’s next

Washington and Tehran are considering an extension of the existing two-week truce to allow more time to negotiate a peace deal, which could further ease geopolitical tensions and support a recovery in equities.

The takeaway

The muted market reaction to the latest geopolitical tensions suggests that investors have largely priced in the Iran war risks, paving the way for a potential recovery in equities. This presents opportunities for investors to consider beaten-down ETFs that are showing renewed momentum, as the market appears to be shifting towards a more stable and recovery-oriented phase.