Stocks are rallying despite the Iran war and stubborn inflation. Here's why.

MoneyWatch Stocks are booming despite the Iran war, inflation and the country's dour mood. Here's why. .chip { background-image: url('/fly/bundles/cbsnewscore/images/chip-bgd/chip-bgd-moneywatch.jpg'); } By Aimee Picchi Aimee Picchi Associate Managing Editor, MoneyWatch Aimee Picchi is the associate managing editor for CBS MoneyWatch, where she covers business and personal finance. She previously worked at Bloomberg News and has written for national news outlets including USA Today and Consumer Reports. Read Full Bio Aimee Picchi May 27, 2026 / 4:37 PM EDT / CBS News Add CBS News on Google The S&P 500 is on a hot streak, notching nine record highs in May alone despite soaring gasoline prices, sliding consumer confidence and the highest inflation in almost three years.The rally in stocks also has more room to run, according to Wall Street analysts. On Wednesday, Goldman Sachs upped its target for the S&P 500, projecting that the broad-based index could reach 8,000 points by year-end, or about 6% higher than its current level. So why is Wall Street increasingly upbeat even as many Americans remain gloomy about the economy? Investors are focused on artificial intelligence's potential to boost productivity and on robust first-quarter corporate profits, LPL Financial chief equity strategist Jeff Buchbinder told CBS News."I've been doing this for 25 years, and I've never seen anything like this — it's really amazing how big these earnings numbers are," Buchbinder said. Here are three reasons why the stock market is soaring.Surging corporate profits Technology companies grew earnings by 50% on average in the three months of the year, far stronger than the 10% growth they typically see in the period, Buchbinder said. Excluding tech companies, U.S. corporations boosted their earnings growth by 20% in the first quarter, or double the typical rate. Businesses are benefiting from lower tax rates and other breaks enacted last year under the...