VOO Returns to All-Time Highs as Market Shrugs Off Iran War

The S&P 500 closed at 6,967 on Tuesday, putting it within striking distance of the 6,978 all-time high set in January. The index has now recovered the entirety of the 9%-plus drawdown it suffered in March, when the Iran war sent oil markets into a tailspin and raised the specter of losing upwards of 20% of global oil supply.



The recovery suggests that the market is looking through the geopolitical disruption and pricing in an eventual resolution. Oil prices remain elevated relative to pre-war levels, but they have settled into a range that most economists consider manageable for the broader economy, assuming the conflict does not escalate further.

For investors who panicked during the March selloff, the snapback is a familiar and painful reminder of how difficult it is to time the market. 

Beneath the headline index, however, the composition of returns in 2025 looks meaningfully different from recent years. The cap-weighted Vanguard S&P 500 ETF (VOO) is up just 2% year to date, while the Invesco S&P 500 Equal Weight ETF (RSP) has gained 4.7%. 

Small caps have fared even better, with the iShares Russell 2000 ETF (IWM) up 9.3%. Value stocks are also leading, with Vanguard Value Index Fund ETF (VTV) up 6.9%. And international equities are outperforming for a second consecutive year, with Vanguard Total International Stock Index ETF (VXUS) up nearly 10%.




The divergence marks a notable shift away from the megacap-driven, U.S.-centric market leadership that defined much of the past decade. 

Whether it represents a durable rotation or a temporary blip remains to be seen. But for now, the breadth of the rally is wider than investors have grown accustomed to.