Strong earnings from Caterpillar and Palantir Technologies helped lift major US stock indexes to fresh records, easing investor concerns that heavy spending on artificial intelligence could begin weighing on corporate profits.
The Dow Jones Industrial Average climbed 907 points, or 1.71%, to close at 54,091.42. The S&P 500 advanced 1.79% to 7,736.52, while the Nasdaq Composite gained 2.59% and finished at a record 26,584.99.
Caterpillar and Palantir Lead the Market Higher
Caterpillar raised its full-year revenue growth outlook as demand for power-generation equipment continued to benefit from the rapid expansion of AI data centers. The company’s shares jumped 5.6%, making Caterpillar the largest contributor to the Dow’s advance.
Palantir delivered an even stronger market reaction. PLTR shares surged 29.5% after the software company increased its full-year revenue forecast. The move marked Palantir’s strongest one-day gain since February 2024.
The latest rally pushed the Dow’s year-to-date gain above 12% and lifted the index to a new all-time high.
The positive earnings trend extended well beyond Caterpillar and Palantir. Of the 304 companies in the S&P 500 that had reported second-quarter results, 85.2% exceeded analysts’ earnings expectations. That was significantly higher than the long-term average of 67.5%, according to Reuters.
Semiconductor stocks also strengthened as investors continued to view chipmakers as major beneficiaries of AI infrastructure investment. The Philadelphia Semiconductor Index rose 6.6%, extending its winning streak to four consecutive sessions and recovering part of its 20.6% decline in July.
Global Stocks Join the Record-Breaking Rally
The rally was not limited to Wall Street. European equities also moved higher as technology stocks and stronger-than-expected corporate results supported investor sentiment.
The pan-European STOXX 600 gained 0.73% to close at a record 656.86 points. The MSCI All Country World Index rose 1.30% and reached a new intraday high, reflecting broad strength across global equity markets.
Lower oil prices also supported risk appetite. Brent crude fell 5.3% to $79.36 per barrel as investors assessed the possibility that diplomatic progress in the conflict involving Iran could reduce shipping risks around the Strait of Hormuz.
The decline in energy prices helped ease inflation concerns and shifted expectations for Federal Reserve policy. Market pricing showed the probability of a September interest-rate increase falling to 56.9% from 67.2%. The yield on the two-year US Treasury note also dropped to its lowest level in two weeks.
