The Dow Jones jumped 907 points to close at 54,091.42, with the S&P 500 climbing 1.79% to 7,736.52. Behind the surge: strong earnings from Caterpillar and Palantir Technologies that eased months of anxiety over AI spending justifying its premium valuations.
Caterpillar raised its full-year revenue forecast on the back of booming AI data center construction. The stock popped 5.6%, delivering the biggest single-day boost to the Dow. Palantir went much further. Its shares rocketed 29.5% after the company hiked guidance, marking the stock's strongest day since February 2024.
The momentum sprawled across markets. Of the 304 S&P 500 companies that reported second-quarter results, 85.2% beat Wall Street estimates, crushing the long-term average of 67.5%, according to Reuters. Semiconductor stocks extended a four-session rally, with the Philadelphia Semiconductor Index gaining 6.6% as investors bet on AI-linked chipmakers. The index has now clawed back most of its brutal 20.6% July plunge.
Global follow-through and oil's peace premium
The rally wasn't confined to America. Europe's STOXX 600 index hit a record close, up 0.73%, while the MSCI All Country World Index gained 1.30% and touched an intraday high. Oil prices dropped 5.3% to $79.36 a barrel on bets that Iran tensions could ease, potentially reopening the Strait of Hormuz to more shipping. That move pushed September rate-hike odds down to 56.9% from 67.2% and sent two-year Treasury yields to their lowest level in two weeks.
Not everyone was buying the euphoria. Jack Ablin, chief investment strategist at Cresset Capital Management, voiced caution as records piled up. "I don't sense one ounce of skepticism among investors, from oil to interest rates to equities," he said. "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."
The Nasdaq Composite, meanwhile, jumped 2.59% to 26,584.99, also hitting a new high. The Dow is up over 12% this year.
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