Stocks are actually having a good month

• Ten of the 11 industry sectors of the S&P 500 are flashing green, led by consumer discretionary, information technology and communication technology shares.
• The tech-heavy Nasdaq has climbed a perky 6.2%.
• The Russell 2000 index of smaller stocks is nearly 5.4% higher.

The big picture: The July rally provides a respite for beaten-down portfolios.

• Since peaking on Jan. 3, the S&P 500 broke down badly, as the Federal Reserve pivoted to a rate-hiking stance.
• The S&P had shed as much as 23.6% by mid-June, as a bear market took hold. Since then, things have stabilized, with the index rising more than 6%.

The intrigue: What changed? Oil prices and interest rates, mostly, as global demand showed signs of sagging, both in the U.S. and China, in the face of nosebleed energy costs.

• Early last month, U.S. crude oil was hovering around $120 a barrel. (It's now about $100.)
• Prices at the gas pump were over $5 a gallon. (They're now under $4.50.)
• The decline in energy prices has bolstered confidence that inflation, which hit a 41-year high in June, is unlikely to spiral wildly higher.

• That's helped push 10-year Treasury yields, a crucial input into the formulas virtually all investors use to value stocks, from roughly 3.50% last month to around 3% now.

Will it last? Of course not! Nothing in the markets ever really lasts. But if oil prices stabilize — a big if, given the war in Ukraine — and inflation expectations keep falling and the Fed doesn't go full-on Volcker with interest rates, then we could have a decent foundation for a push higher in stocks.

What to watch: The Fed's rate decision next Wednesday — everyone expects a hike of three-quarters of a percentage point — along with chair Jerome Powell's tonal qualities during his post-meeting press conference.