US stocks: Dow, S&P 500 close at record highs as AI earnings impress, oil prices tumble
Palantir Technologies surged nearly 30%, its biggest one-day percentage gain since February 2024, after the company raised its annual revenue forecast.
Caterpillar, widely viewed as a bellwether for the global industrial economy, rose about 6% after lifting its annual revenue-growth forecast. The expansion of AI data centres has boosted demand for the company’s power-generation and construction equipment.
The stock was the Dow’s biggest contributor, adding more than 300 points to the blue-chip index. Investors have been closely examining results from AI-linked companies for signs that the industry’s massive spending will generate sufficient returns.
Crude prices fall 5% on US-Iran deal hopes
Stocks received an additional boost as crude oil prices fell about 5% on hopes of a diplomatic resolution to the conflict. A Qatari official was quoted by Reuters as saying that negotiations were continuing while US Treasury Secretary Scott Bessent said a deal with Iran to reopen the Strait of Hormuz could be reached within two days.
The decline in oil prices also reduced expectations of a Federal Reserve rate hike in September, pushing US Treasury yields lower.
“I don’t sense one ounce of skepticism among investors, from oil to interest rates to equities,” Jack Ablin, chief investment strategist and founding partner at Cresset Capital Management in Chicago, told Reuters.
“The earnings reports were certainly supportive, and that’s great news, but I’m not sure a handful of earnings reports justifies new records in the S&P,” he said.
Meanwhile, the S&P 500 gained 137.20 points, or 1.81%, to end at 7,737.70 points, while the Nasdaq Composite gained 668.10 points, or 2.58%, to 26,581.99. The Dow Jones Industrial Average rose 912.25 points, or 1.72%, to 54,090.66.
The Dow recorded a closing high for a second straight day after notching its first since July 6 on Monday, while the S&P 500 on Tuesday secured its first closing record since July 2.
Semiconductor stocks, viewed as major beneficiaries of AI spending, rallied sharply. The Philadelphia Semiconductor Index surged nearly 7% and was headed for a fourth consecutive daily gain after tumbling 20.6% in July. The S&P 500 technology sector climbed 4.5%, leading all 11 major sectors.
Corporate results have largely exceeded expectations this earnings season. Of the 304 S&P 500 companies that had reported second-quarter results as of Friday, 85.2% beat estimates, compared with a long-term average of 67.5%, according to LSEG, Reuters reported. Every major S&P 500 sector recorded profit growth.
SpaceX shares jumped more than 8% ahead of the company’s first earnings report since its public debut, due after the market close. McDonald’s edged up 0.1% despite disappointing results, while Pfizer gained 1.1% following an upbeat quarterly report.
On the economic front, U.S. job openings declined in June, driven by a sharp drop in the healthcare and social-assistance sector. However, stronger hiring and low layoffs indicated that the labour market remained stable. The figures were the first in a series of labour-market reports this week, culminating in Friday’s government payrolls data.
Advancing stocks outnumbered decliners by 2.11 to 1 on the NYSE and 2.95 to 1 on the Nasdaq. The S&P 500 recorded 25 new 52-week highs and three new lows, while the Nasdaq Composite posted 117 new highs and 43 new lows.
