The S&P 500 ended Tuesday on a high note, and if you ask the crowd on Polymarket, Wednesday's open is likely to keep the party going. After a softer-than-expected inflation report gave investors hope that the Federal Reserve might not need to tighten as aggressively, the benchmark index rose 0.38% to close at 7,543.59. The July 15 Polymarket contract now implies a 73% probability that the index will open higher on Wednesday.
That's a pretty confident bet, and it's grounded in some genuinely good news. June's consumer price index fell 0.4% from the previous month, while annual inflation slowed to 3.5% — below the 3.8% economists had penciled in. That cooler reading prompted traders to sharply reduce expectations for an immediate rate hike. According to CME FedWatch, the probability of a July hike fell to 17% from 42% a day earlier. (Though, to be fair, markets still see a meaningful chance of higher rates later this year.)
Attention now turns to another busy day of earnings. United Airlines (UAL), Morgan Stanley (MS), Johnson & Johnson (JNJ), and BlackRock (BLK) are all scheduled to report after major U.S. banks broadly exceeded expectations to kick off earnings season. If the trend holds, it could add more fuel to the rally.
The Bull Case
Cooling inflation reinforced hopes that the Fed can remain on hold in the near term, supporting risk appetite across equities. Semiconductor stocks rebounded after Monday's selloff, with the VanEck Semiconductor ETF (SMH) rising 2.5%, while Micron Technology (MU) and Lam Research (LAM) each gained around 5%. Strong results from major U.S. banks also added to optimism that corporate earnings remain resilient despite macroeconomic uncertainty.
But investors aren't out of the woods yet. Although inflation cooled in June, oil prices remained elevated as renewed U.S. strikes on Iran continued to fuel geopolitical uncertainty. Brent crude stayed above $84 per barrel even after retreating from session highs. And markets still price in a high probability of a Federal Reserve rate hike by September. So the path forward is far from clear.
S&P 500 futures climbed 0.11% early Wednesday, suggesting a modestly positive open.
How the Previous Bet Played Out
The S&P 500 opened Tuesday at 7,536.70, above Monday's close of 7,515.34, meaning the July 14 Polymarket contract resolved "Up." That contract attracted approximately $133,818 in traded volume, marking one of the stronger betting sessions this month and a notable pickup from the relatively thin activity seen through much of the second week of July. So the crowd has been on a bit of a hot streak.
