The S&P 500 closed at a record on Friday, rising 0.22 per cent to 7,580.06 and capping a winning month with a fresh all-time high. The advance extended the index's run to a ninth straight week of gains and a seventh consecutive winning session, the longest such streak since 2023, as Wall Street pressed ahead despite an uncomfortable backdrop of accelerating inflation and an unresolved war in the Middle East.
Two forces did most of the work. The first was the artificial-intelligence trade, which has repeatedly overridden macroeconomic anxieties and lifted the largest technology companies to ever-higher valuations on the conviction that the build-out of AI infrastructure has years left to run. Blowout earnings from companies tied to the theme reinforced the narrative, drawing fresh money into a market already concentrated in a handful of mega-cap names.
The second was geopolitics, or rather the hope of its easing. Investors took encouragement from the prospect that the United States and Iran would finalise a ceasefire memorandum that reopened the Strait of Hormuz and lifted the war-risk premium that had hung over energy markets through the spring. Falling oil prices, the most direct expression of that optimism, eased fears that an energy shock would entrench the inflation the latest data had revealed.
That inflation data gave the rally its uncomfortable subtext. The most recent reading of the Federal Reserve's preferred price gauge came in hotter than expected, the firmest in years, a print that in another era might have triggered a sharp repricing of interest-rate expectations. Instead the market chose to look through it, betting that an energy-driven surge would fade if the Iran framework held and crude continued to retreat.
The willingness to set records in the face of hot inflation captured the character of the current advance: a market propelled by structural enthusiasm for AI and a conviction that the macro risks are manageable, even as the breadth of the rally remains narrow. Bond markets have been more circumspect, with yields caught between the pull of firm inflation and the prospect of slower growth ahead.
The immediate test now is the same one that has framed every session this week — whether President Trump signs the Iran memorandum and whether oil's decline proves durable. A signed deal would validate the optimism embedded in equity prices; a collapse would force a rapid rethink. For the month just ended, at least, the bulls had the better of the argument.