The S&P 500 closed at a record high on Tuesday alongside the Dow Jones Industrial Average and Nasdaq Composite, lifted by upbeat revenue forecasts from Caterpillar and Palantir Technologies. Oil prices tumbled on hopes for a diplomatic resolution to the Iran war, while the yen held most of last week's intervention-driven gains.
The S&P 500 climbed 1.53% to a record 7,716.66 on Tuesday, joining the Dow Jones Industrial Average and Nasdaq Composite in fresh record highs after a string of upbeat corporate earnings forecasts.
Dow Jones gained 933.95 points, or 1.76%, to 54,112.36. The Nasdaq rose 548.22 points, or 2.12%, to 26,462.11.
MSCI's gauge of stocks worldwide also hit a record intraday high, climbing 1.14% to 1,143.88. Europe's STOXX 600 added 0.73%.
Earnings optimism drives the rally
Caterpillar, often seen as a bellwether for the global industrial economy, raised its annual revenue growth forecast after benefiting from a buildout of AI data centers. Palantir Technologies also raised its annual revenue forecast, and its shares surged.
More than 80% of S&P 500 companies are beating analysts' earnings expectations for the last quarter, according to LSEG data. "There's a general sense of optimism out there and that's being reflected," said Oliver Pursche, senior vice president at Wealthspire Advisors, adding that investors are reacting to stronger earnings and stronger expectations.
Oil tumbles on Iran diplomacy hopes
Oil prices extended their recent sharp declines after Qatari and U.S. officials raised hopes for a diplomatic resolution to the Iran war that could improve flows through the Strait of Hormuz. U.S. Secretary of State Marco Rubio said Tuesday there was progress in talks with Iran and Oman about moving more ships through the strait, though a final agreement had not been reached. Treasury Secretary Scott Bessent said a deal to reopen the strait could come as soon as Tuesday or Wednesday.
U.S. crude fell 5.43% to $75.98 a barrel. Brent dropped 5.24% to $79.38 a barrel.
Yen holds gains as Fed rate-hike bets fade
The Japanese yen weakened 0.18% against the dollar, to 157.45 per dollar, after holding on to most of the gains from last week's coordinated intervention by U.S. and Japanese authorities — the first such U.S. action in Japan's currency market in 15 years. Japan's expansionary fiscal policy and the Bank of Japan's gradual pace of rate hikes could still weigh on the yen, some market participants warned.
Falling oil prices also pulled down U.S. Treasury yields, as traders priced in lower odds of a Federal Reserve interest rate hike in September. Most analysts believe Fed Chair Kevin Warsh does not want to raise rates, and incoming data could give him room to hold steady. The yield on benchmark 10-year notes fell 4.91 basis points to 4.635%.
Sources: Investing.com, Yahoo Finance
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