The 3 forces that drove a remarkable, record-setting week on Wall Street

You could call it a comeback. Stocks soared to record highs last week on hopes of a peace deal with Iran; The S&P 500 closed above 7,100 for the first time and the Nasdaq ended its longest winning streak (13 days of gains) since 1992. For the week, the broad-based S&P rose 4%, while the tech-heavy Nasdaq rose 6%. The Dow Jones Industrial Average rose 1.7%. It capped a rare and dramatic turnaround for stocks. As Barclays strategist Venu Krishna noted in a note to clients, the S&P 500 index bounced back from near correction territory (down nearly 9% from its all-time high) to its all-time high in just 11 trading days. That was the fastest move from a trough to record highs of at least 9 percent since at least 1990, he said. This rapid turnaround was largely the result of investors pricing in an end to the Iran-US conflict. But Wall Street was also digesting strong bank earnings and a turnaround in the battered software sector. Signs of peace The week started like every Monday since the US attacked Iran in late February: investors are trying to understand how the latest developments abroad might affect their portfolios. First, the collapse of talks in Islamabad over the weekend led President Donald Trump to announce a blockade of all maritime traffic in and out of Iranian ports. But none of this seemed to matter; The market rose even higher. A new round of talks began between Washington and Tehran on Tuesday, and on Wednesday Trump told Fox Business that the war was "very close to being over," causing stocks to rise. One session later, the president announced that a ceasefire agreement had been signed between Israel and Lebanon, which set a new record. On Friday, Iran finally declared the Strait of Hormuz "fully open." Jim Cramer said there could be more gains in war-pressed stocks if the good news keeps coming. He cited construction companies like Home Depot, which rose 3.6% on Friday. During Friday's Morning Meeting, Cramer said he sees a rotation coming in stocks under pressure from the war. "Now the Fed has a chance to cut rates under Kevin Warsh. So we're really seeing a return to things that were overdue," he said. Software returns Our biggest winners in the portfolio have been laggard software stocks; Microsoft, CrowdStrike and Salesforce were our top three winners. Software stocks have been hit this year on fears that artificial intelligence startups will eat into their market share. The iShares Expanded Technology Software ETF (IGV) has recouped some of its losses, rising about 14% but remains down about 20% for 2026. Microsoft has increased by 14% since the beginning of the week. Management needs to devote more of its current computing capacity to Microsoft Azure rather than Copilot, its faltering AI assistant. CrowdStrike gained 11.9%. The club isn't worried about what AI means for this company. As AI models become more advanced, this will actually be a headwind for our two cybersecurity companies, including Palo Alto Networks. We plan to eventually exit Palo Alto and transfer some of these funds to CrowdStrike. Salesforce increased by 10.4%. While AI may disrupt the armchair-based business model, we remain hopeful that the administration will turn things around. We'll be listening closely to CEO Marc Benioff's comments during the earnings call in May. Consumers are doing well. The bank's profits showed a very healthy consumer performance despite war-related market volatility during the last month of the quarter. The results obtained in consumer-facing businesses such as credit cards painted a positive, albeit cautious, picture. Growth in consumer spending this quarter was above the pace set for 2025, JPMorgan said. Credit card spending volume also increased by 9% year-on-year, while delinquency rates remained fairly stable. JPMorgan CFO Jeremy Barnum said "consumers and small businesses remain resilient." Wells Fargo's credit card business was also promising. CFO Mike Santomassimo said new credit card account openings are up nearly 60% year over year. Revenues from the consumer banking and lending division experienced revenue growth of 6.6% in the first quarter. Before the war-induced surge in energy prices, CEO Charlie Scharf said gas accounted for 6% of total debit card spending and 4% of total credit spending. Each of these levels increased by 1%. “Consumers are spending more than a year ahead, including spending more on gas, but they haven't slowed spending on everything else,” Scharf said. This was an otherwise uninspiring report from Wells. Although the bank delivered earnings above expectations, management disappointed us with a second consecutive quarter of revenue losses. Club downgraded the stock to a hold equivalent of 2 at launch. Wall Street's other big banks fared much better through the first quarter of 2026. The club, which holds Goldman Sachs, has been placed both at the top and bottom, along with rivals such as Bank of America, JPMorgan and Morgan Stanley. "Someone [bank] We continue to like this stock because of its profitable deal-making business, Cramer said Friday. (See here for a complete list of stocks in Jim Cramer's Charitable Trust.) When you subscribe to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim places a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable foundation. If Jim talked about a stock on CNBC TV, he waits 72 hours after issuing the trading alert before executing the trade. THE ABOVE INVESTMENT CLUB INFORMATION, TOGETHER WITH OUR TERMS AND CONDITIONS AND PRIVACY POLICY, DOES NOT EXIST OR CREATE ANY OBLIGATIONS OR DUTIES OF CONFIDENTIALITY. 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