Stock Market Soars as Earnings, Iran Deal Fuel Rally

The stock market saw a significant surge on Tuesday, with the Dow Jones Industrial Average rising by over 900 points and the S&P 500 reaching a new all-time high. This marks one of the biggest single-day advances for the S&P 500 this year.

Treasury Secretary Scott Bessent's comments to CNBC that the US and Iran could reach a deal to reopen the Strait of Hormuz contributed to the rally. The Strait is a key passageway for global crude trade, and the market is assuming that oil prices will stabilize longer term. However, if the conflict continues, it could still pose a headwind.

Earnings are also driving the bull case, with strong second-quarter results leading to 27% year-over-year earnings growth for the S&P 500, excluding mark-ups at Alphabet and Amazon. The broader index is on pace to deliver even more incredible earnings growth, of 45%, with the inclusion of these two companies.

The tech sector is also rallying, with a broad array of tech stocks rising on optimism that they can all be winners from AI. The iShares Semiconductor ETF jumped over 6% on Tuesday, while the iShares Expanded Tech-Software Sector ETF added nearly 5%. Even megacap stocks like Microsoft and software companies joined in on Tuesday's rally.

The S&P 500 is also tearing through a key resistance level, closing above 7,700 for the first time ever. Historically speaking, four back-to-back days of greater than 1% gains in the Nasdaq Composite is a precedent for further gains.