The stock market had a day on Monday. The S&P 500 climbed 1.48% to close at 7,600.50, a sharp reversal from the tech-led gloom of July. And now, the question on every trader's mind is: can it keep going?

According to Polymarket, the prediction market where you can literally bet on the answer, the odds say yes. The Aug. 4 contract implies a 77% probability that the index opens higher on Tuesday. That's a pretty confident bet, especially after a day like Monday.

Why That Number Matters

Monday's rally wasn't just a blip. It marked a real shift in sentiment. Investors are regaining confidence that the massive spending on artificial intelligence is actually paying off. That's a big deal after a July that saw technology stocks get hammered.

But there's more to it than just AI optimism. Geopolitical tensions have eased significantly. President Donald Trump said over the weekend that he had called off planned U.S. strikes on Iran and that negotiations between Washington and Tehran would resume. This came after reports that the administration was preparing another wave of military action. The prospect of diplomacy instead of bombs sent oil prices sharply lower and gave global markets a reason to breathe easier.

The shift in sentiment was also reflected on Polymarket. The Aug. 3 contract attracted roughly $594,636 in traded volume, the highest participation in weeks. That's a sharp jump from the relatively muted activity seen through much of July, underscoring just how much interest the geopolitical developments have sparked.

The Bull Case

So, what's driving the optimism? For one, lower oil prices are easing inflation concerns. That's a big weight off the market's shoulders. And stronger-than-expected earnings are reinforcing the AI trade.

Take Amazon.com Inc. (AMZN), which surpassed a $3 trillion market capitalization for the first time. That's a milestone. Meta Platforms Inc. (META), Nvidia Corp. (NVDA), Alphabet Inc. (GOOGL), and Microsoft Corp. (MSFT) all posted strong gains as well. The megacaps are back in favor.

Tuesday's earnings calendar also provides another opportunity for markets to build on that momentum. AMD's (AMD) results are expected to offer fresh insight into semiconductor demand, which is a key barometer for the AI trade. Investors will also be watching June factory orders, international trade data, and corporate updates for signs that economic momentum remains intact after July's volatility.

Early Tuesday, S&P 500 futures added 0.21%, ahead of expected earnings from Caterpillar Inc. (CAT) and McDonald's Corp (MCD).

How The Previous Bet Played Out: The S&P 500 opened on Monday at 7,504.78, above Friday's close of 7,489.72, meaning the Aug. 3 Polymarket contract ultimately resolved "Up." So the prediction market has been right recently.

Of course, nothing is guaranteed. But with the geopolitical backdrop improving, oil prices falling, and tech earnings looking strong, the bulls have a decent case. Polymarket traders are putting their money where their mouth is.