Hope Floats. Trump announced a cease-fire extension with Iran too late to impact regular trading hours on Tuesday, so the market celebration spilled over into today. Tech and earnings also helped lift markets.

The Dow Jones Industrial Average added 341 points, or 0.7%, on Wednesday, while the S&P 500 and Nasdaq Composite both notched record highs, rising 1.0% and 1.6%, respectively.

President Donald Trump issued what amounts to an indefinite suspension of his deadline for a deal with Iran, which fueled today’s rebound. He said the U.S. will hold off on attacking the nation until a new proposal is put forward, or “discussions are concluded, one way or the other.”

The Strait of Hormuz remains closed, oil prices have inched higher, and some investors are still understandably jittery. But Wall Street has mostly moved on from the conflict, treating this development as the latest sign that a peace deal will happen at some point.

“The combination of improving Iran headlines, investor exhaustion over the volatility in March and a strong start to earnings season has helped to propel stocks to record highs,” says Rick Gardner, chief investment officer at RGA Investments. “Once stocks reach new highs after a correction, like the one in March, the upward trend can last for some time, as corrections reset sentiment which allows stocks to climb higher.”

Elsewhere in the markets, tech once again took the lead, and both semiconductors and software stocks rose together—a welcome reversal from recent trends. Tesla’s latest results could be another feather in the sector’s cap, as operating profit at the electric vehicle maker jumped triple digits.

“This week’s developments reinforce that AI is still broadening across funding, hardware, and enterprise adoption, even as the market becomes more selective about where returns will accrue,” writes Ulrike Hoffmann-Burchardi, CIO Americas and global head of equities for the UBS Chief Investment Office.

Earnings overall have been a catalyst for recent market gains. Wednesday winners include Philip Morris, which had its biggest stock gain in more than a year on Wednesday, and GE Vernova, which hit fresh highs.

With a bevy of other earnings results tomorrow, investors may be feeling upbeat that war is on its way out, ushering in a profitable peace.

The Hot Stock: GE Vernova +13.8%
The Biggest Loser: TE Connectivity -9.1%

Best Sector: Information Technology +2.3%
Worst Sector: Real Estate -0.7%

Investors may be feeling great, but what about consumers? Americans are confronting higher prices at the pump, and the average price of gas is more than $4 across the U.S. That sticker shock follows years of high inflation already weighing down wallets.

So why isn’t the market reflecting that struggle? Federal tax refunds are trending higher this year. That is giving some Americans a greater ability to deal with the jump in energy prices, which hit right around the time many were getting their refunds.

Retail consumer data through early April remained strong, notes Bernstein analyst Zhihan Ma. “This suggests that consumers are spending tax refund money fairly real time despite ongoing macro uncertainties. In fact, a survey suggests that nearly 60% of consumers plan to use the incremental tax refund within a month of receiving it.”

It’s also worth noting that while consumer sentiment remains depressed, that may not be as reliable an indicator of reduced spending as it has been in the past.

As Sevens Report Tom Essaye notes, the University of Michigan Consumer Sentiment hit an all-time low this month—lower than it was during crises like 9/11, the Great Recession, and the pandemic. That could reflect in part extreme inflation fatigue after years of higher prices, but that depressed reading “doesn’t seem to mesh with the financial reality of low-4% unemployment and generally healthy economic metrics.”

That might be cold comfort to Americans who are still struggling to pay their bills. But it shows that while consumer confidence may be in the dumps, investors have reason to be optimistic.

Two things can be true at once.

American Express, Ameriprise Financial, Baker Hughes, Blackstone, CBRE Group, CenterPoint Energy, Comcast, Digital Realty Trust, Dover, Dow, Edwards Lifesciences, Erie Indemnity, Freeport-McMoRan, First Citizens BancShares, Hartford Insurance Group, Honeywell International, Huntington Bancshares, Intel, Keurig Dr Pepper, Lockheed Martin, Nasdaq, NextEra Energy, Newmont, PG&E, Pool Corp., Principal Financial Group, PulteGroup, Roper Technologies, Sanofi, SAP, Snap-On, Thermo Fisher Scientific, Union Pacific, Verisign, and West Pharmaceutical Services report quarterly results tomorrow.

S&P Global releases both its Manufacturing and Services Purchasing Managers’ Indexes for April. Economists forecast a 52.5 reading for the Manufacturing PMI and a 50 for the Services PMI. This compares with readings of 52.3 and 49.8, respectively, in March. Readings above 50 indicated expansion compared to the prior month, while below 50 represent contraction.

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