The S&P 500, a widely watched basket of 500 large U.S. companies, rose 1.8% on Tuesday, August 4, 2026, as companies reported strong profits and oil prices eased (AP News). The index has now climbed nearly 6% since the Federal Reserve's meeting the week before. The Technology sector led the gains, with the Nasdaq Composite, a tech-heavy stock index, up nearly 5% over two days (CNBC).

The Dow Jones Industrial Average, another major stock index, sat at 54,085.88, up 1.71%. The Dow had already closed at a record high on August 3, 2026, as tensions between the U.S. and Iran showed signs of cooling (Reuters). Other global indexes also rose: Japan's S&P/TOPIX 150 gained 2.12% to 3,543.09, the S&P Europe 350 rose 0.73% to 2,670.60, and Canada's S&P/TSX 60 added 1.26% to 2,109.58. The S&P GSI was the only major index to fall, dropping 0.39% to 5,183.03.

So far in August 2026, the S&P 500 is up 3.3% (CNBC). The index entered the month about 1% below its all-time closing high of June 2, 2026, and as of early July was up about 10% for the year (Reuters). At one point during the summer rally, the S&P 500 stood just 0.1% below that record (AP News).

Oil prices played a role. Brent crude, a global benchmark for oil, fell 4.7% during the summer rally, which helped stocks by lowering costs for companies that use a lot of energy (AP News). The oil drop also reflected easing geopolitical tensions that had flared earlier in the summer.

Here is what's driving the rally underneath the headlines. Putnam's midyear analysis found that S&P 500 company earnings jumped 30% while valuations contracted, meaning stock prices rose because businesses were actually making more money, not because investors were simply paying more on a whim (The Street). Think of it like a shop whose sales genuinely went up, versus a shop whose price tag got bid up by hype. The first is more durable.

That distinction matters. Earnings-driven rallies can hold up better through market turbulence than rallies built on low interest rates or speculation, because prices are supported by real cash flowing into companies.

The S&P 500 Growth index, which tracks faster-growing companies, had a 1-day return of 1.45% and a 1-year return of 18.71% (S&P Dow Jones Indices). Combined with the earnings data, this points to a rally led by large technology companies, which carry a lot of weight in these indexes.

History offers a measured read on what comes next. The S&P 500 has often continued gaining after reaching new highs following a drop of 5% to 10%, posting a median return of 0.66% in those cases (Reuters). That is small but positive.

For 2025 context, the S&P 500 finished December down 0.05%, bringing its full-year 2025 performance to 16.39% (S&P Dow Jones Indices). The index covers about 80% of the available U.S. large-company stock market across 500 leading companies (S&P Dow Jones Indices).

The broader context is that three forces — strong profits, cheaper oil, and calmer geopolitics — combined to produce a sharp two-day rally that might otherwise have taken weeks. Whether the S&P 500 reclaims its June 2 record will depend less on the current momentum and more on whether companies keep posting the kind of profit growth Putnam found at midyear. The historical data after new highs is positive but thin, so while the trend appears to favor further gains, the cushion for anyone buying in now is narrow.