The S&P 500 has been on a tear, and if you ask the crowd on Polymarket, that momentum isn't slowing down anytime soon. Traders on the prediction market are betting heavily that the benchmark index will open higher on Tuesday, after the long Memorial Day weekend. The May 26 contract implies a 91% probability that the S&P 500 will start the day above Friday's close.

Friday was already a record-setter: the S&P 500 rose 0.37% to close at 7,473.47, its eighth straight weekly gain — the longest such streak since late 2023. That kind of run usually makes people nervous, but the mood has been buoyed by a few key developments.

First, there's the Iran situation. President Donald Trump said on Monday that talks with Iran to end the war were "proceeding nicely," which is about as optimistic as you'll hear from this administration. The comment gave a boost to hopes that a diplomatic resolution might actually be within reach. And that, in turn, sent oil prices tumbling. West Texas Intermediate crude futures dropped more than 5% in early trading. Lower oil prices are a big deal for markets because they help ease inflation fears — and inflation has been the main thing keeping investors up at night.

Speaking of inflation, the recent decline in oil prices has improved the outlook for price pressures, reducing concerns that higher energy costs could derail economic growth or corporate profits. That's the bull case in a nutshell: strong earnings, falling oil, and a Fed that might not need to hike as aggressively as some feared. In fact, according to CME's FedWatch tool, traders are now pricing in an 8.5% chance of a rate hike in July — up from just 0.9% a month ago. That sounds counterintuitive (higher rates are usually bad for stocks), but it actually reflects confidence that the economy is strong enough to handle it.

S&P 500 futures were up 0.54% early Tuesday, pointing to a positive open. And for those keeping score at home, the previous Polymarket bet on the S&P 500 opening higher on Friday resolved "Up" — the index opened at 7,468.82, above Thursday's close of 7,445.72. So the crowd has been right lately.

Of course, geopolitics can change in an instant, and oil prices are notoriously volatile. But for now, the stars seem aligned for another green day on Wall Street.