Conflict Averse. The markets got an unwelcome reminder today that the war in Iran isn’t over, clouding a picture that’s recently been dominated by sunny earnings reports.

On Monday, the Dow Jones Industrial Average lost 557 points, or 1.1%, while the S&P 500 declined 0.4% and the Nasdaq Composite slipped 0.2%; the latter two had closed out last week at fresh highs.

The war in the Middle East, which Wall Street had all but ignored in recent weeks, flared back into view on Monday. The United Arab Emirates said it had detected Iranian missiles, while Iranian state media said missiles had hit a U.S. warship near the Strait of Hormuz.

“We continue to think a diplomatic solution to this conflict remains the most likely outcome, especially with worsening approval ratings for President Trump sharpening political incentives to find a deal,” James McCann, senior economist, investment strategy at Edward Jones, wrote in a note today. “However the risk of a more prolonged or larger disruption to global energy markets remains important to monitor, in our view, especially with markets having rallied sharply in recent weeks.”

The fact that the market had been powering ahead under the assumption that the war would end soon made today’s escalation all the more worrisome for investors. It was also a reminder that Wall Street has shrugged off a remarkable number of geopolitical worries this year.

“The ‘teflon market’ has proved resilient despite lingering concerns, driven by strong corporate profits,” notes Truist Chief Investment Officer Keith Lerner. “S&P 500 forward earnings estimates are up 11% year-to-date, one of the strongest upward revisions in recent decades.”

As long as the market values earnings above all else, days like Monday will likely remain the exception rather than the norm.

The Hot Stock: Tyson Foods +8%
The Biggest Loser: United Parcel Service -10.5%

Best Sector: Energy +0.9%
Worst Sector: Materials -1.6%

Energy was the only sector to end higher on Monday, a fact that can help explain why the markets overall have remained so strong throughout the war in Iran.

The conflict has destroyed the lives of civilians and soldiers on the ground, and dealt a serious blow to consumers around the world grappling with higher prices and fuel shortages. But the oil supply bottleneck in the Strait of Hormuz has only fueled the U.S. energy sector.

Since the start of the war, the U.S. has shipped more than 250 million crude oil barrels overseas, representing net exports of roughly 3 million barrels per day, as of late April. That means the U.S. is now helping to fill as much as 15% of the basic war-caused energy shortage, notes Macquarie Group Global FX & Rates Strategist Thierry Wizman. “In a way, therefore, the U.S. has become indispensable in filling the supply gap created by Iran’s blockage of the Strait.”

The U.S. is getting a potential 0.2% boost on its gross domestic product due to the increased export and production. That addition is also supporting the dollar, Wizman notes. “What is additive to the U.S.’s GDP, of course, may be subtracted from oil importers’ real GDP, all else equal.”

Framed in that way, and along with the fact that consumer spending and artificial intelligence investment are likewise holding up, it’s understandable why the market is looking through the war (most days) to focus on the brighter corporate earnings picture.

Advanced Micro Devices, HSBC, Arista Networks, Celsius Holdings, EOG Resources, Fiserv, Eaton, Shopify, Pfizer, Anheuser-Busch Inbev, KKR, Marathon Petroleum, and PayPal Holdings report quarterly results tomorrow.

The Institute for Supply Management releases its Services Purchasing Managers’ Index for April. The consensus estimate is for a 54 reading, unchanged from March.

The Bureau of Labor Statistics releases the Job Openings and Labor Turnover Survey for March. Expectations are for 6.6 million job openings on the last business day of March, down from nearly 6.9 million in February.

• GameStop Makes $56 Billion Bid for eBay

• Berkshire’s New CEO Hosts His First Annual Meeting. The Big Takeaways.

• Think AI Spending Won’t Stoke Inflation? This Time Could Be Different.

• The Jet Fuel Crisis Is Here. The Fallout for Summer Vacations.

• Trump IRAs Are Coming. They’re No Silver Bullet for U.S. Retirement Savers.

Barron’s Live returns on Monday. Barron’s Live features timely and actionable insights for investors. We give you behind-the-scenes conversations with the newsroom, connecting you with our editors and reporters covering the markets, the economy, and more.

Sign up here