Dow and S&P 500 Hit Record Highs as Palantir Soars 20%, Caterpillar Jumps 10% on Earnings Beat; Oil Plunges 5% on US-Iran Deal Hopes

Mumbai, Aug 4: US stock markets extended their winning streak to three consecutive sessions on Tuesday, with the Dow Jones Industrial Average and the S&P 500 touching fresh all-time highs. The rally was propelled by blockbuster quarterly results from Palantir Technologies and Caterpillar, alongside a sharp decline in crude oil prices following optimistic comments from US Treasury Secretary Scott Bessent regarding a potential US-Iran deal to reopen the Strait of Hormuz. 

The tech-heavy Nasdaq Composite (^IXIC) advanced 281.84 points, or 1.09%, to 26,195.74 in early trading, building on Monday’s 2.1% surge. The benchmark S&P 500 (^GSPC) gained 45.18 points, or 0.59%, to 7,645.68, while the blue-chip Dow Jones Industrial Average (^DJI) soared 705.43 points, or 1.33%, to 53,883.84, setting a new intraday record. The Dow had closed at an all-time high of 53,178.41 on Monday, marking its 22nd record close of the year. 

Trading volumes remained robust, with the Nasdaq recording 1.5 billion shares exchanged in the opening session, while the S&P 500 saw 265.7 million shares change hands. The Dow’s average volume stood at 55.3 million shares, reflecting heightened investor participation across all three major indices. 

Palantir Shares Surge 20% as AI-Driven Commercial Revenue Jumps 149% 

Palantir Technologies (PLTR) emerged as the standout performer, with shares skyrocketing 20.11% in Tuesday’s session following the company’s exceptional second-quarter results. The data analytics firm reported second-quarter revenue of $1.94 billion, representing a 93% year-over-year increase, significantly exceeding analyst expectations of approximately $1.8 billion. Adjusted earnings per share came in at $0.41, surpassing the consensus estimate of $0.35. 

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Chief Executive Officer Alex Karp described the quarter as “otherworldly,” attributing the performance to soaring demand for artificial intelligence platforms. The company’s US commercial revenue witnessed a remarkable 149% surge to $764 million, underscoring the accelerating adoption of Palantir’s AI sovereignty solutions among enterprises and government agencies. Government revenue, including both US and international contracts, climbed 78% year-over-year to reach $1.02 billion, demonstrating the company’s expanding footprint across both public and private sectors. 

Palantir raised its full-year 2026 revenue outlook to a range of $8.150 billion to $8.158 billion, up from the previous guidance of $7.650 billion to $7.662 billion. The company now expects US commercial revenue to reach at least $3.4 billion, representing a 134% year-over-year increase. Operating margins expanded significantly, with adjusted operating income rising to $268.8 million, compared to $131.4 million in the prior-year period, reflecting improved operational leverage and cost discipline. 

Caterpillar Posts First $20 Billion Quarter, Stock Climbs 10.5% 

Caterpillar (CAT), the heavy equipment manufacturer and a key Dow component, delivered a historic quarterly performance, with shares advancing 10.46% to approximately $916 per share, contributing substantially to the Dow’s record-setting session. The company reported second-quarter adjusted earnings of $8.17 per share, a 73% surge from the same period last year and well above the $6.22 consensus forecast. Revenue climbed 24% year-over-year to a record $20.54 billion, surpassing analyst estimates of $19.33 billion and marking the company’s first-ever quarter with revenue exceeding $20 billion. 

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The company’s order backlog reached a record $72.1 billion, fueled by robust demand for power generation and construction equipment. Chief Executive Joe Creed said: “Strong order rates and a growing backlog reflect broadening momentum across all three of our primary segments”. The industrial giant’s performance was particularly noteworthy given the challenging macroeconomic environment, with the company successfully navigating supply chain constraints and inflationary pressures while maintaining pricing power across its product portfolio. 

At the segment level, Construction Industries sales climbed 35% to $8.346 billion, while Power & Energy sales rose 17% to $8.238 billion, driven primarily by data-centre applications. The Resource Industries segment, which serves mining customers, contributed $4.889 billion in revenue, representing a 14% increase year-over-year. Caterpillar generated $4.4 billion in operating cash flow and returned $2.2 billion to shareholders through share repurchases and dividends. The company now expects “mid-to-high teens” sales growth for the full year, an improvement from its prior “low double-digit” forecast. 

Oil Prices Plunge 5% as Bessent Signals US-Iran Deal Within Days 

Crude oil prices tumbled sharply on Tuesday after US Treasury Secretary Scott Bessent indicated that a deal with Iran to reopen the Strait of Hormuz could be finalised as soon as Tuesday or Wednesday. West Texas Intermediate (WTI) crude futures dropped 5% to around $76.50 per barrel, while Brent crude declined 4% to approximately $80.25 a barrel. 

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“We are in talks with the Iranians. There is a chance we may have a deal today or tomorrow to open the strait and move towards a more normalised position in this conflict,” Bessent told CNBC’s “Squawk Box”. He confirmed that any agreement would ensure “freedom of movement” for commercial ships through the strategic waterway. The Strait of Hormuz, a critical chokepoint for global oil shipments, has been a source of significant geopolitical tension since its closure in April 2026, which had previously driven oil prices to multi-year highs. 

Bessent predicted that prices could fall further once hundreds of vessels stuck in the Persian Gulf are able to exit. “It’s not just energy. It’s fertiliser, it’s refined products, it is the various industrial gases,” he said. “We could see a big relief trade as those prices go down”. The comments followed President Donald Trump’s weekend announcement that he had called off a major attack on Iran to allow for negotiations. The US dollar index edged slightly higher to 99.93 as markets digested the implications of a potential diplomatic breakthrough, while gold futures rose 0.9% to $4,130 an ounce. 

Semiconductor Sector Leads Broad-Based Market Rally 

The semiconductor sector demonstrated exceptional strength on Tuesday, with the Nasdaq-100 heatmap revealing widespread gains across chip manufacturers. Intel (INTC) surged 6.89% following positive analyst commentary on its foundry business prospects, while Micron Technology (MU) gained 5.69% and Advanced Micro Devices (AMD) advanced 5.52%, the latter ahead of its own earnings report scheduled after the closing bell. 

Marvell Technology (MRVL) jumped 12.68%, reflecting growing confidence in its data-centre networking solutions, while ARM Holdings (ARM) climbed 9.85% and Broadcom (AVGO) added 4.30%. Applied Materials (AMAT) gained 4.17%, and Lam Research (LRCX) advanced 5.13%, while KLA Corporation (KLAC) rose 3.83%. The Philadelphia Semiconductor Index, a key benchmark for chip stocks, advanced approximately 3.2%, building on Monday’s gains and recovering much of the losses experienced during last week’s technology sector selloff. 

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The broad-based semiconductor rally was supported by Nvidia’s (NVDA) 2.18% gain, with the AI chipmaker continuing to benefit from sustained demand for its graphics processing units used in artificial intelligence applications. Qualcomm (QCOM) added 3.37%, while Texas Instruments (TXN) advanced 3.34% and Analog Devices (ADI) gained 2.33%. The sector’s performance reflected growing investor confidence in the long-term growth trajectory of AI-related infrastructure spending. 

Magnificent Seven Stocks Deliver Mixed Performance Amid Broad Rally 

Shares of the Magnificent Seven mega-cap technology stocks opened mixed on Tuesday, following a strong Monday session that saw Amazon’s market capitalisation surpass $3 trillion for the first time. Nvidia (NVDA) led gains with a 2.18% advance, while Tesla (TSLA) added 1.00% and Apple (AAPL) edged 0.11% higher. However, Amazon (AMZN) declined 2.22%, Meta Platforms (META) fell 1.15%, and Alphabet (GOOGL) lost 0.38%. 

Microsoft (MSFT) slipped 0.35%, while Netflix (NFLX) declined 0.44% and Alphabet’s Class C shares (GOOG) dropped 0.53%. The mixed performance among mega-cap stocks highlighted the selective nature of the current market rally, with investors favouring companies with direct exposure to AI infrastructure and data centre spending over more diversified technology giants. 

Amazon’s retreat followed Monday’s historic achievement of crossing the $3 trillion market capitalisation threshold for the first time, with profit-taking emerging as investors locked in gains from the e-commerce and cloud computing giant’s recent rally. The company’s cloud division, Amazon Web Services, continues to benefit from increasing enterprise adoption of AI services, though concerns about slowing growth in its core retail business weighed on sentiment. 

SpaceX Set for First Earnings Report as Public Company 

Space Exploration Technologies (SPCX), the Elon Musk-led rocket and satellite company, is scheduled to report its first quarterly earnings as a public company after the market close on Tuesday. Wall Street expects the company to report second-quarter revenue of approximately $6.83 billion and a loss of $0.23 per share. The company’s shares have been under significant pressure since completing the largest IPO in history in June, declining approximately 46% from their post-IPO highs. 

Investors are expected to focus on the performance of the Starlink satellite internet business, which is projected to generate about $3.82 billion in second-quarter revenue and $1.42 billion in operating profit. The company’s AI business is also under scrutiny, with Wall Street expecting approximately $2.33 billion in revenue for the quarter, though AI capital spending is projected to reach about $10.2 billion. The company reported a loss of $4.3 billion in the first quarter on revenue of $4.7 billion while carrying approximately $30 billion of debt. 

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Cathie Wood’s ARK Invest has been actively accumulating SpaceX shares ahead of the earnings report, purchasing 229,651 shares on July 27-28 across its various exchange-traded funds. The ARK Innovation ETF (ARKK) holds approximately $283 million in SpaceX shares as of July 31, making the rocket company one of the fund’s top positions. “We believe that SpaceX will be the most vertically integrated company in the world, participating in almost all of the technologies we think are converging at the same time,” Wood said in a recent webinar. 

Merck, Pfizer, McDonald’s and BP Deliver Mixed Earnings Results 

Merck (MRK) gained more than 1% after reporting an adjusted loss of 13 cents per share on revenue of $16.61 billion, beating analyst expectations of a 27-cent loss on $16.36 billion in revenue. The pharmaceutical giant also raised its full-year revenue guidance, reflecting improved performance across its oncology and vaccines portfolios. The company’s Keytruda franchise continued to demonstrate strong growth, contributing significantly to the top-line beat. 

Pfizer (PFE) ticked higher after posting adjusted earnings of 77 cents per share on revenue of $15.03 billion, exceeding consensus estimates of 68 cents on $14.41 billion. The company increased the low end of its full-year revenue outlook, citing stronger-than-expected demand for its COVID-19 products and promising early data from its obesity drug candidates. The pharmaceutical sector showed mixed performance, with Eli Lilly (LLY) gaining 0.20% ahead of its own earnings report scheduled for Wednesday morning. 

McDonald’s (MCD) gained 1.9% after reporting adjusted earnings of $3.38 per share, beating the $3.32 consensus estimate, though revenue of $7.1 billion missed the anticipated $7.13 billion. The fast-food chain’s same-store sales growth in international markets helped offset softer domestic performance, while menu innovation and digital ordering channels continued to drive customer engagement. 

BP (BP) reported adjusted earnings per share of $0.37, beating estimates of $0.33, while revenue of $69.1 billion surpassed analyst forecasts of $59.93 billion. The energy major also announced it is offloading its US biogas asset Archaea Energy to reduce its debt load, with net debt expected to fall to a range of $14 billion to $18 billion this year. Newly appointed CEO Meg O’Neill is executing a turnaround strategy focused on portfolio optimisation and operational efficiency. 

Treasury Yields, Dollar Index and Commodities Update 

The 10-year US Treasury yield held steady around 4.68%, down from Friday’s high of 4.747% which marked its highest level since January 2025. The 30-year bond yield eased to approximately 5.25% after peaking at 5.2811% on Friday, the highest since 2007. The yield curve continued to signal economic uncertainty, with the spread between 2-year and 10-year yields narrowing as investors assessed the Federal Reserve’s monetary policy trajectory. 

The US Dollar Index (DXY) was trading around 99.93, slipping below the 100 mark as markets increasingly anticipate a potential breakthrough in US-Iran negotiations. The dollar’s decline reflected improving risk appetite among global investors, with emerging market currencies and commodity-linked currencies benefiting from the softer greenback. 

Gold futures rose 0.9% to $4,130 an ounce, supported by safe-haven demand amid ongoing geopolitical uncertainty. Bitcoin was trading around $63,800, little changed over the past 24 hours, as cryptocurrency markets remained range-bound following recent volatility. The cryptocurrency market capitalisation stood at approximately $2.3 trillion, with Ethereum and other major digital assets showing muted price action. 

Job Openings Data and Economic Calendar in Focus 

Investors are closely watching the Job Openings and Labor Turnover Survey (JOLTS), scheduled for release at 10:00 AM ET, which provides insight into labour market demand and employment conditions. Consensus estimates suggest job openings are expected to cool slightly to 7.45 million from the previous reading of 7.594 million. The data marks the first key piece of labour market information this week, culminating in Friday’s July nonfarm payrolls report. 

Strong employment figures could reinforce expectations that the Federal Reserve will maintain a hawkish stance, with markets currently pricing around a 65% probability of a September rate hike. The labour market data will be closely scrutinised for signs of easing wage pressures and moderating employment growth, both of which could influence the central bank’s policy decisions in the coming months. 

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The Federal Reserve’s recent communications have emphasised a data-dependent approach to monetary policy, with officials highlighting the importance of labour market conditions in shaping the inflation outlook. Any significant deviation from consensus estimates could trigger substantial market reactions across equity, bond, and currency markets. 

The convergence of robust corporate earnings, particularly from AI beneficiaries Palantir and Caterpillar, alongside easing geopolitical tensions driving oil prices lower, has created a supportive environment for equity markets. The S&P 500’s advance toward its record high and the Dow’s continued ascent reflect broad-based momentum across technology, industrials and consumer discretionary sectors. Investors now await labour market data and additional earnings reports, including Advanced Micro Devices and SpaceX after the close, for further directional cues. The JOLTS report and Friday’s nonfarm payrolls will provide critical insights into the Federal Reserve’s policy trajectory, with labour market conditions remaining central to monetary policy decisions.