US stock markets closed at record highs on Tuesday, August 4, 2026, with the S&P 500 reaching 7,736.52, up 1.79%, and the Dow Jones Industrial Average climbing 1.71% to 54,085.94. The Nasdaq 100 also saw a significant jump of 3.32% to 29,733.16. This rally was fueled by optimism surrounding a potential agreement between the US and Iran to reopen the Strait of Hormuz, along with robust earnings reports from AI-linked companies.
Hopes for an Iran deal were a major catalyst, as Treasury Secretary Scott Bessent indicated that an agreement could be reached within the next day or two. This prospect led to a significant drop in oil prices, with Brent crude falling below $80 per barrel to $79.36, its lowest level since July 10. Analysts like Tony Miano from Wells Fargo Investment Institute noted that lower oil prices could alleviate inflation concerns, contributing to market enthusiasm.
Corporate earnings played a crucial role, particularly from companies in the AI sector. Palantir Technologies soared 29.5% after raising its annual revenue forecast, marking its biggest daily percentage gain since February 2024. Caterpillar, a bellwether for the global industrial economy, jumped 5.6% due to increased demand for its equipment, driven by AI data center buildouts. The Philadelphia Semiconductor index also surged 6.6%, completing its best four-day rally since 2020. Overall, 85.2% of S&P 500 companies reporting Q2 earnings had beaten estimates.
The Dow recorded back-to-back all-time highs, its first since July 6, while the S&P 500 achieved its first closing record since July 2. The positive sentiment was also reflected in a retreat in US Treasury yields and a reduced expectation for a Federal Reserve rate hike in September, with CME FedWatch indicating a drop to 56.9% probability from 67.2% previously. Even SpaceX, after reporting strong revenue in late hours, saw its shares drop about 4% after going public.
