NDR: Sentiment still matters amid Iran selloff

Client reactions to recent market swings can best be described as remarkable, though not bewildering to seasoned investors. The most common question has been what to do now. This report draws one key lesson from the Iran related selloff and recovery: sentiment still matters. Many were surprised the market rallied even as the Strait of Hormuz stayed closed longer than expected and geopolitical messaging remained mixed. Notably, the S&P 500 bottomed shortly after key sentiment indicators reached extreme pessimism, reflecting intense near-term fear alongside longer-term confidence that policymakers would ultimately prevent a recession. 

 Since then, sentiment has swung to excessive optimism. That shift suggests near-term gains may be harder to achieve without improved geopolitical news, stronger economic data, or better earnings results. 

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