Imani Moise

It was another week of records for markets.

The S&P 500 and Nasdaq hit new highs.

Strong tech results overshadowed both ongoing anxiety over the war and surging oil prices.

But the rally wasn't smooth.

Stocks swung throughout the week as headlines about the conflict in the Middle East shifted and investors weighed a mixed batch of corporate earnings.

Still, the Nasdaq rose 1.5% to a new record driven by tech companies cashing in on AI.

The S&P 500 added about half a percent and the Dow Jones Industrial Average slipped 0.4%.

Energy stocks were one of the biggest winners in the S&P 500, rising about 3% over the week as investors bet disruptions in the Middle East will keep oil prices elevated for longer than expected.

The conflict between the U.S.

and Iran has effectively brought traffic in and out of the Persian Gulf close to a standstill, cutting off one of the world's most critical oil supply routes.

And even if the conflict were resolved quickly, analysts and oil industry executives say the damage to global energy infrastructure could take months or even years to fully unwind.

Oil fields have been shut down, workers have fled the region, and restarting production is expected to be slow and costly.

Brent crude, the international oil benchmark, surged nearly 17 percent this week to finish at $105.33 a barrel.

You'd think war would be good for defense stocks, but major contractors like Northrop Grumman and Lockheed Martin were among the worst performers this week.

Even though both companies reported a surge in demand as they reported earnings, investors aren't convinced that's translating into better returns.

Lockheed Martin missed Wall Street estimates for both sales and profit, despite rising global demand for weapons and munitions.

The company also burned through more cash than expected, raising concerns that higher costs and heavy investment could eat into returns.

Shares in Lockheed Martin fell about 13 percent on the week, while Northrop Grumman also dropped roughly 13 percent, despite reporting a jump in sales and profit.

Some of that growth may already be priced in after a strong run earlier this year.

Even with this week's pullback, both stocks are still up for the year.