S&P 500 Notches 8th Weekly Gain in Second-Best Rally on Record

The S&P 500 closed out an eighth consecutive weekly gain on May 22, its longest winning streak since December 2023 and a 17.3% cumulative surge that ranks as the second-best eight-week rally in the benchmark's history.247wallst The advance fully erased a 7% first-quarter drawdown, lifting the index roughly 10% on the year and dragging the Dow Jones Industrial Average to a record close above 50,500.247wallst +1 Optimism over a potential U.S.–Iran framework deal, AI-driven earnings, and an aggressive short squeeze have combined to power one of the sharpest comebacks of the postwar era.

A historic eight-week sprint

Market historian Ryan Detrick says only one prior stretch — a 17.4% rip in 1997 — beat the current 17.3% run, a margin of just 0.1 percentage point.247wallst After that 1997 record, the S&P 500 added another 22% over the following year.247wallst Across every prior eight-week winning streak since 1950, the index has averaged gains of 2% over the next month, 7% over six months, and 17% over the next year; when the eight-week move topped 12%, stocks have been higher 12 months later in every instance.247wallst The CBOE Volatility Index has slid from 25.78 on April 7 to 16.59 on May 25 as fear has bled out of the tape.247wallst

What's powering the rebound

Iranian state media outlined a preliminary U.S.–Iran memorandum that would open a 60-day negotiation window, lift the U.S. naval blockade of the Strait of Hormuz, and restore commercial shipping to pre-war levels within a month.247wallst Brent crude, above $100 a barrel days earlier, slid below $95, while West Texas Intermediate fell from $102 to as low as $88.247wallst Short interest across U.S. equities has climbed to its highest level since 2008 — roughly double the 2020 peak — fueling a punishing squeeze as bearish positions are unwound into a rising market.247wallst Goldman Sachs has lifted its year-end S&P 500 target to 8,000, citing an earnings-led continuation.aol

The caveats under the hood

The setup is not a classic recovery rally. The S&P 500 trades near 23 times forward earnings, well above its 10-year average of about 18, with mega-cap AI names including Nvidia and Microsoft still doing much of the index's lifting.247wallst The 10-year Treasury yield sat at 4.56% on May 22, meaning equities have advanced despite rising long-end borrowing costs, and the University of Michigan's April consumer sentiment reading came in at 49.8 — the lowest in a year.247wallst The Federal Reserve has cut 75 basis points over the past year and held the upper bound at 3.75% since December 10, 2025.247wallst A 5–10% pullback after a 17% sprint would be unremarkable; the cleaner historical signal, for now, still points up.247wallst +1