The S&P 500 closed above 7,700 for the first time on Tuesday, leading a broad rally that also lifted the Dow Jones Industrial Average and the Nasdaq Composite. Traders pointed to easing Iran-related oil worries, a strong earnings season and a broad tech rebound as the drivers. Ned Davis Research warns the market is entering its historically weakest three-month stretch, though unusually bearish sentiment could limit any pullback.
The S&P 500 closed above 7,700 for the first time, a near 2% gain that ranks among its biggest single-day advances of the year. The Dow Jones Industrial Average also surged more than 900 points for its best day in nearly two months, while the Nasdaq Composite rose more than 2.5%.
Bessent's Iran comments cool oil prices
Treasury Secretary Scott Bessent told CNBC's Squawk Box that the U.S. and Iran could reach a deal to reopen the Strait of Hormuz. According to CNBC, Bessent said: "We are in talks with the Iranians." He added there was a chance of a deal today or tomorrow to move toward a more normalized position in the conflict.
Oil futures tumbled following the comments, and bond yields eased as well, adding support to the equity rally. Chief investment strategist Jeff Krumpelman said the market is betting oil prices will stabilize longer term, though he cautioned that a prolonged conflict pushing oil toward $150 a barrel could still weigh on stocks.
Earnings season beats expectations
Second-quarter results have driven much of this year's bull case. The S&P 500 is on pace to post 27% year-over-year earnings growth, excluding markups at Alphabet and Amazon, a 4% beat versus the consensus at the start of earnings season. Including those two companies, the index is on pace for 45% growth, according to Bank of America Securities.
Nasdaq-100's four-day rebound draws attention
Tech stocks that had diverged for months rallied together on Tuesday, with the iShares Semiconductor ETF jumping more than 6% and the iShares Expanded Tech-Software ETF adding nearly 5%. Goldman Sachs analyst Peter Callahan, cited by Crypto Briefing, said the Nasdaq-100's roughly 9.45% gain over four trading sessions stemmed from improved technicals, cleaner positioning, better valuations and stronger fundamentals. The index had fallen into a shallow correction the week before.
Weakest seasonal stretch looms
Even so, stocks are entering what has historically been their weakest period of the year. Ned Davis Research's cycle composite, which blends the one-year seasonal, four-year presidential and 10-year decennial cycles, points to weakness from mid-August through early October. Unusually bearish investor sentiment, however, could help limit any selling, the firm noted.
Tuesday's advance also cleared a resistance level that technical analysts had been watching closely. The S&P 500 opened above the 7,620 June-high level and never looked back. The index is now up 3.3% for August.
Sources: CNBC, MarketWatch (snippet-based), Crypto Briefing
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