The S&P 500 closed at a record high of 7,736.52, gaining 1.79%, while the Dow Jones Industrial Average surged 1.71% or 907.53 points to 54,085.94, marking its first close above 54,000. Both indices reached all-time highs, with the S&P 500 achieving its first record close in two months and the Dow notching its second consecutive record. The Nasdaq Composite also saw a significant rise, increasing by 2.59% to 26,584.99, though it remains about 2% shy of its early June record.
The market rally was primarily fueled by optimism surrounding a potential deal to reopen the Strait of Hormuz, a critical oil shipping lane. Treasury Secretary Scott Bessent indicated that a deal could materialize within a day or two, leading to a roughly 5% drop in crude oil prices. This decline in oil prices also contributed to a decrease in expectations for a Federal Reserve rate hike in September, with the probability falling to 56.9% from 67.2%.
Strong corporate earnings, particularly from the tech sector, provided additional tailwinds. Palantir Technologies saw its shares rocket by 29.5%, marking its biggest daily percentage gain since February 2024, after raising its annual revenue forecast. Caterpillar, a data center equipment supplier and industrial bellwether, also surged 5.6% after beating earnings estimates and raising its annual revenue growth forecast. Of the 304 S&P 500 companies that have reported second-quarter earnings, 85.2% have beaten estimates, surpassing the long-term average of 67.5%.
