The market went up a lot last week after the United States and Iran agreed to stop fighting for two weeks. Tech and industrial stocks each rose about 5%, and small‑cap stocks climbed 4%. Almost every sector went higher except energy.
Most experts say the rally is not because they think the Middle East is now peaceful. J.P. Morgan’s chief economist warned that stability is still uncertain and the U.S. has not dramatically improved its position.
The real boost comes from cheaper oil. Lower energy prices reduce worries about inflation and make it more likely the Federal Reserve will lower interest rates. Traders now see about a 30% chance of a 0.25‑point rate cut by December, up from just 14% a day earlier.
Earnings reports are also adding fuel to the fire. Semiconductor maker Aehr Test Systems jumped 35% even though its revenue missed estimates. Investors liked the company’s new focus on testing high‑power AI chips and silicon‑photonic parts, which are key to the current AI boom.
Levi Strauss rose 15% after reporting strong earnings, and Delta Airlines posted record quarterly revenue.
Investors are now looking ahead to big bank reports, such as JPMorgan and Citigroup, which are expected to move the market further.
In short, the market isn’t betting on lasting peace. It’s betting on lower energy costs that keep the Fed’s hand light and on a strong earnings season. Those two factors are making the bullish case hard to ignore.
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