The S&P 500 extended its record-setting run on Friday as easing Treasury yields and optimism around a potential resolution to the U.S.-Iran war supported risk appetite, and Polymarket traders are betting the benchmark index will open higher on Tuesday after the Memorial Day holiday.
The S&P 500 rose 0.37% to close at a record 7,473.47 on Friday. The May 26 Polymarket contract implied a 91% probability that the index would open higher when trading resumes on Tuesday.
Why That Number Matters
Investor sentiment improved after President Donald Trump said on Monday that talks with Iran to end the war were “proceeding nicely,” boosting hopes that a diplomatic resolution may be within reach.
Oil prices fell sharply following Trump’s comments, with West Texas Intermediate crude futures dropping more than 5% in early trading. Lower oil prices could help ease inflation concerns that have weighed on markets in recent weeks.
The S&P 500 is also coming off its eighth consecutive weekly gain, its longest winning streak since late 2023, reflecting continued confidence in the earnings outlook despite geopolitical uncertainty.
The Bull Case
Strong corporate earnings remain a key support for equities. The recent decline in oil prices has also improved the outlook for inflation, reducing concerns that higher energy costs could derail economic growth or corporate profits.
Meanwhile, investors have scaled back expectations for Federal Reserve rate cuts. According to CME’s FedWatch tool, traders are now pricing in an 8.5% chance of a rate hike in July, up sharply from 0.9% a month ago.
S&P 500 futures gained 0.54% early Tuesday.
How The Previous Bet Played Out: The S&P 500 opened Friday at 7,468.82, above Thursday’s close of 7,445.72, meaning the May 22 Polymarket bet resolved “Up.”
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