Key Takeaways:
The Dow and S&P 500 closed at records Tuesday as Palantir and Caterpillar earnings lifted AI optimism and crude slid on Strait of Hormuz hopes.
The Dow jumped 907 points, or 1.7%, to a record close, while the S&P 500 rose 1.8% to 7,686.38, its first record since June.
"The market has undergone a technical reset that sets up fresh buying opportunities," said Scott Rubner, strategist at Citadel Securities.
Palantir Technologies surged 20% after quarterly revenue nearly doubled to $1.94 billion, while Caterpillar jumped 7.5% on record $20.5 billion sales, up 24%. The PHLX Semiconductor index added 6.5%, and the Russell 2000 index of small caps also closed at a new high. The Nasdaq Composite climbed 2.6%.
Treasury Secretary Scott Bessent said the U.S. and Iran could reach a deal as early as Tuesday or Wednesday to reopen the Strait of Hormuz, sending West Texas Intermediate crude down 5.85% to $75.64 a barrel. The 10-year Treasury yield fell 5 basis points to 4.62%. Q2 earnings are projected to grow 23%, with 86% of S&P 500 firms beating estimates.
The rally extended across Europe, where the STOXX 600 closed at a record high, up 0.6% to 656.27. The Euro Area EU50 index gained 1.26% to 6,508 points, with the DAX up 0.9% and the CAC 40 up 0.3%.
Palantir's 93% revenue jump to $1.94 billion — with U.S. commercial revenue up 149% — pushed the stock to the top of the Nasdaq-100, and the company raised its full-year revenue outlook to $8.15 billion. Caterpillar's construction segment, boosted by data-center demand, drove record sales, with the company's backlog reaching a new high of $72.1 billion. The two names accounted for roughly 91% of the Dow's premarket advance, according to TechStock data.
Brent crude fell $4.61 to $79.16 a barrel as diplomatic progress on reopening the Strait of Hormuz eased supply fears. The drop pressured Treasury yields across the curve, with the 2-year at 4.20% and the 30-year at 5.18%. Spot gold traded near $4,070 an ounce and silver near $60.
The VIX fell 0.81% to 15.86, and the July ISM manufacturing index came in strong at 55.6, its fastest growth in four years. Investors now turn to AMD and SpaceX earnings, with SpaceX's first report since its June IPO expected to swing its valuation by as much as $225 billion, according to options data cited by Reuters.
This article is for informational purposes only and does not constitute investment advice.
