The S&P 500 closed at another record high on Monday, but if you ask the crowd on Polymarket, Tuesday's open is looking shaky. The prediction market contract for May 12 implies only a 20% chance that the index will open higher, as investors brace for a key inflation reading and keep an eye on renewed U.S.-Iran tensions.
The benchmark index rose 0.19% to finish at 7,412.84, another all-time closing high. But the mood has shifted overnight. S&P 500 futures were down 0.16% early Tuesday, suggesting a cautious start.
Why That Number Matters
All eyes are on April's consumer price index report, due out Tuesday morning. The Cleveland Fed's inflation nowcasting model projects the headline CPI at 0.45% month-over-month and core at 0.21%. That would push the annual headline rate to 3.56%, up from 3.30% in March — the highest print since September 2023.
Wall Street's consensus is a bit higher: 3.7% for headline and 2.7% for core, versus 3.3% and 2.6% in March. On a monthly basis, economists expect 0.6% headline and 0.4% core. If those numbers come in hot, it could rattle a market that's been riding high on AI enthusiasm and solid earnings.
Geopolitics are adding to the uncertainty. President Donald Trump criticized Iran's latest proposal to end the war, calling it "the weakest right now" after rejecting Tehran's counteroffer, which reportedly included demands for reparations, sanctions relief, and full sovereignty over the Strait of Hormuz. That's not exactly the kind of headline that calms investors.
The Bull Countercase
Despite the geopolitical noise and rising energy prices, tech stocks continue to prop up the market. Micron Technology (MU) jumped 6.5% on Monday as the memory chip rally kept rolling, and Nvidia (NVDA) gained nearly 2%. The broader rally has been resilient throughout the Iran conflict, supported by strong corporate earnings and the AI investment frenzy.
Tuesday's earnings calendar includes Under Armour (UAA), On Holding (ONON), JD.com (JD), and Oklo Inc (OKLO). Their results could provide some direction if the macro picture stays fuzzy.
For context, Monday's Polymarket bet resolved "Down" — the S&P 500 opened at 7,385.31, below Friday's close of 7,398.93. Traders are now betting on a repeat, but with CPI and Iran in play, anything can happen.
