The S&P 500 extended its gains on Thursday as easing oil prices and cooling Treasury yields helped offset inflation concerns, and Polymarket traders are betting the benchmark index will open higher on Friday.

The S&P 500 rose 0.17% to close at 7,445.72 on Thursday, marking its second consecutive advance after snapping a three-day losing streak earlier this week. The May 22 Polymarket contract implied a 78% probability that the index would open higher on Friday.

Why That Number Matters

Investor sentiment has improved as traders increasingly bet that a resolution to the U.S.-Iran war is more likely than not.

Oil prices continued to retreat on Thursday, with West Texas Intermediate crude falling nearly 2% to settle at $96.35 per barrel and Brent crude declining more than 2% to $102.58 per barrel. Lower energy prices have helped ease concerns that the conflict could reignite inflation pressures.

Treasury yields were also volatile during the session. The 30-year Treasury yield, which earlier this week climbed above 5.19% for the first time since before the financial crisis, eased back to 5.09% by Thursday.

Markets are also preparing for President Donald Trump to formally swear in Kevin Warsh as Federal Reserve chair on Friday, succeeding Jerome Powell and marking a closely watched leadership transition at the U.S. central bank.

The Bull Case

Despite heightened volatility in bond markets this week, equities remain resilient.

The S&P 500 is up 0.5% week-to-date and is on track for an eighth consecutive weekly gain, while investors continue to be supported by strong corporate earnings, enthusiasm around artificial intelligence and a still-solid labor market backdrop.

However, investors remain vulnerable to inflation-related shocks if oil prices reverse course or Middle East negotiations stall.

Reuters reported Thursday that Iran's supreme leader had directed enriched uranium to remain inside the country, a development that could complicate efforts to reach a final agreement.

S&P 500 futures rose 0.39% early Friday.

How The Previous Bet Played Out: The S&P 500 opened Thursday at 7,410.78, below Wednesday's close of 7,432.97, meaning the May 21 Polymarket bet resolved "Down" on traded volumes of $240,908.