Key Takeaways:
- S&P 500 surged more than 6% over five sessions to a record 7,736, its biggest gain since last year's tariff selloff.
- Oil's slide on Strait of Hormuz optimism and strong earnings drove the rebound, with the Fear & Greed index at 68.
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S&P 500 surges 6% in five days, largest since tariff selloff
The S&P 500 surged more than 6% over five sessions to a record 7,736, its biggest gain since last year's tariff selloff.
"Fabulous earnings momentum is carrying the index higher," said Ed Yardeni, president of Yardeni Research, who targets 8,250 for the S&P 500 by year-end.
Technology led the advance, with the Nasdaq Composite climbing 2.6% and the Philadelphia Semiconductor Index up 5.8%. Palantir Technologies jumped 29.5% after revenue rose 93%, while Caterpillar added 5.6% on record quarterly sales above $20 billion. Energy lagged as Brent crude fell 5.3% to $79.36 a barrel.
The rebound has reset short-term positioning. The Fear & Greed index sits at 68 in Greed territory, yet retail sentiment registered just 0.03 across 2,748 WallStreetBets mentions, a gap traders are watching for signs of a late chase.
Oil Slide and Earnings Power the Rebound
The surge coincided with three drivers: a sharp drop in crude oil on optimism that the Strait of Hormuz will reopen, a wave of earnings beats, and falling Treasury yields. Brent crude slid 5.3% to $79.36 a barrel, its fourth straight session of losses, after President Donald Trump said the strait would reopen "very soon" and the U.S., Iran and Oman neared a 60-day temporary agreement. WTI fell 5.69% to $75.64.
The earnings backdrop reinforced the move. About 86% of S&P 500 companies that reported second-quarter results beat profit estimates, with the index's earnings growth rate reaching 47.4%, a level not seen since 2021. Palantir's 93% revenue jump and Caterpillar's record $20 billion quarter powered the advance, while the Dow Jones Industrial Average closed above 54,000 for the first time at 54,215.07, up 1,036.66 points.
Fear & Greed at 68 as Retail Stays Cool
The Fear & Greed index, which aggregates seven market indicators, sits at 68, firmly in Greed territory. That reading, paired with the 6% five-day surge, points to buyers aggressively accepting risk. Yet retail tone remains muted: sentiment scored just 0.03 across 2,748 WallStreetBets mentions, a divergence that often marks a wall of worry as the market climbs while a slice of retail stays skeptical.
The SPY ETF's 10-day return of +2.51% against the five-day gain of 6% confirms the index traded lower in the first half of that window before the snapback. Short sellers face immediate pressure from a move of this speed, and cash on the sidelines tends to get pulled in, which can extend momentum but also sets up crowded positioning.
What Traders Watch After the 6% Surge
The aftermath of a 6% five-day surge demands discipline. Traders are watching whether the SPY 10-day return can expand, whether the Fear & Greed index pushes into Extreme Greed, and whether retail sentiment eventually turns aggressively bullish — a spike that often marks the end of a short-term rally. Historical resistance levels from last year's tariff recovery may also come back into play.
The 10-year Treasury yield eased as oil's decline tempered inflation expectations, while gold rose 1.52% and the dollar index slipped 0.03%. With the S&P 500 up about 11% year-to-date and trading near record levels, the question is whether earnings growth can broaden beyond mega-cap technology or whether concentration unwinds into a correction.
This article is for informational purposes only and does not constitute investment advice.
