The S&P 500 closed at 7,736.52 on Tuesday, up 136.02 points or 1.79%, marking a record high as strong earnings from artificial intelligence-linked companies and easing geopolitical tensions fueled a broad market rally. The Dow Jones Industrial Average also reached a record close of 54,085.88, gaining 907.47 points or 1.71%, while the Nasdaq Composite surged 2.59%.
Earnings from companies benefiting from the AI buildout drove much of the day’s strength. Palantir Technologies soared 29.5%—its biggest daily gain since February 2024—after raising its annual revenue forecast on strong demand from government and commercial customers. Caterpillar jumped 5.6% after raising its annual revenue growth forecast, buoyed by surging demand for power-generation and construction equipment needed to build out AI data centers. Caterpillar alone accounted for about 280 points of the Dow’s gain.
Earnings Beat Expectations Broadly
Investors have been closely monitoring earnings results this season for signs that massive AI spending will deliver justified returns. Of the 304 S&P 500 companies that reported second-quarter earnings as of Friday, 85.2% beat estimates, according to LSEG data, well above the long-term average of 67.5%. Every major S&P sector showed profit growth.
Semiconductor stocks, another major beneficiary of AI infrastructure spending, surged as a group. The Philadelphia Semiconductor Index shot up 6.6% and rose for a fourth straight session after tumbling 20.6% in July. The S&P 500 tech sector gained 4.1% as the best-performing of the 11 major sectors.
Beyond earnings, crude oil prices dropped about 5% on hopes for a diplomatic resolution to the Iran conflict. Treasury Secretary Scott Bessent said a deal to reopen the Strait of Hormuz could come within two days, easing inflation concerns. The drop in oil prices and expectations of lower rates reduced Fed rate-hike odds for September to 56.9% from 67.2% in the prior session, according to CME FedWatch.
The strong earnings from Palantir and Caterpillar underscored how the AI boom is spreading beyond traditional tech stocks to industrial and defense sectors. Advancing issues outnumbered decliners by a 2.84-to-1 ratio on the New York Stock Exchange, signaling broad participation in the rally.
Jack Ablin, chief investment strategist at Cresset Capital Management, cautioned against reading too much into the move. “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 S&P 500 is now up roughly 12.85% year-to-date, with AI stocks continuing to accelerate the broader index higher. The record close comes after the index surged 1.5% on August 3 as Big Tech earnings gains and easing oil prices boosted sentiment.
Sources
- Reuters — S&P 500 and Dow closing levels, Palantir and Caterpillar earnings reactions, oil prices, Iran deal hopes, Fed rate expectations, semiconductor index performance, tech sector gains, earnings beat rates
- KCRA — Confirmation of S&P 500 closing at 7,736.52, up 136.02 points to 1.8%
- Yakima Herald — S&P 500 closing details for August 4, 2026
- MarketWatch — S&P 500 year-to-date performance at 12.85%
- Yahoo Finance — Nasdaq Composite closing level and percentage gain
