Conventional wisdom dictates that stocks usually take the escalator up, and the elevator down. During this latest rebound, however, it was the opposite: What had been a slow grind lower since the S&P 500's January peak was completely erased in the span of just a couple of weeks.

This factoid shared by Bespoke Investment Group gets right at what is making this rebound so unusual. According to historical data going back to 1928, the S&P 500 SPX just accomplished the following for the first time ever: It rallied back to a record high in 11 days or fewer, after falling between 5% and 10%.

The takeaway? It isn't that "V-shaped" rebounds like what investors just witnessed don't happen - they clearly do, as anybody who held on through last April's tariff tantrum can no doubt attest. It's just that, usually, they are preceded by a larger decline.

Back in April, the S&P 500 skidded to the edge of bear-market territory, defined as a drop of 20% or more. This time around, we made it right to the edge of what most analysts would consider "correction territory" - defined as a drop of 10% or more from a recent high.

"It's certainly been an unusual rebound," said Paul Hickey, co-founder of Bespoke in an interview with MarketWatch. "You've seen moves of this magnitude before, except you don't necessarily tend to see them this close to the market highs."

"The market is usually a lot lower when this happens."

A shift in positioning

Investors have rattled off a number of reasons that help to explain exactly what made this latest rebound so propulsive - particularly in light of the fact that the drawdown that preceded it was not very steep.

Positioning is one. Wall Street analysts from JPMorgan Chase & Co. to Vanda Research had pointed out that individual investors - also known as the retail crowd - had shied away from buying the latest dip, like they had in the past.

Models put together by Deutsche Bank and others showed that professional investors and systematic funds had also started to shift their exposure to stocks back into neutral territory. Late last week, analysts at Goldman Sachs warned that CTAs, a type of systematic fund that focuses on trading futures contracts tied to commodities and financial assets, were likely poised to buy tens of billions of dollars' worth of stocks in every conceivable scenario.

When positioning is so extremely bearish, it only takes a modest improvement in investors' sentiment to kick off a big move higher, said Anthony Saglimbene, Ameriprise chief market strategist, in commentary shared with MarketWatch via email.

Higher earnings forecasts

Another explanation - one that is perhaps more meaty from the standpoint of investing fundamentals - is the fact that Wall Street analysts continued to consistently push their corporate earnings forecasts higher, even as investors soured on stocks earlier this year.

The pattern can be seen in the chart below, which compares the forward price-to-earnings ratio for the S&P 500 with analysts' forecasts for earnings per share over the next 12 months for the index's member companies. Forward earnings per share measures how much investors are paying for a stock or index compared with how much companies are expected to earn over the next year.

"If you look at a long-term chart of the expected earnings for the S&P 500, and the index's price, they usually track," said Glenn Dorsey, head of client portfolio management at Clark Capital Management, during an interview with MarketWatch.

But when these two lines diverge in a meaningful way, it could signal an attractive opportunity to buy, Dorsey said. It is worth noting that the Iran conflict wasn't the only thing weighing on stocks this year.

The AI "scare trade" hammered software names and professional-services companies earlier this year. Creeping doubts about the potential returns from massive AI investment weighed on shares of Microsoft $(MSFT)$ and other so-called "hyperscalers."

Recently, investors have started to come around to the view that the U.S. economy is more insulated from a spike in oil prices these days than it was in the past, Dorsey said. It almost seems hard to believe in hindsight, but Wall Street economists saw a recession as a near-certainty after the previous oil price spike in 2022. The downturn never came to pass.

Of course, economic data shows the labor market is in a weaker place these days than it was back then, too. Consumers are also showing signs of strain, according to delinquency rates on credit cards and other types of consumer debt. But rising energy efficiency and a surge in U.S. production could certainly help blunt the impact from the rise in global energy prices.

"We don't use as much as people think, and it's not the thing that's going to derail the economy," he said.

U.S. stocks finished higher once again on Thursday, with the S&P 500 and Nasdaq Composite COMP both logging back-to-back record highs. The Dow Jones Industrial Average DJIA also traded higher.