US stock market hits record highs as AI profits pile and oil prices ease

A screen displays stock market index data as traders work on the floor at the New York Stock Exchange in New York City on Tuesday. Photograph: Jeenah Moon/ReutersView image in fullscreenA screen displays stock market index data as traders work on the floor at the New York Stock Exchange in New York City on Tuesday. Photograph: Jeenah Moon/ReutersStock marketsUS stock market hits record highs as AI profits pile and oil prices easeS&P 500 shot up 1.8% and the main measure of Wall Street’s health topped its prior all-time high set a few months ago

The US stock market rallied to records on Tuesday as profits kept piling up for companies and as oil prices eased.

The S&P 500 shot up 1.8%, and the main measure of Wall Street’s health topped its prior all-time high set a couple months ago. The Dow Jones industrial average added 907 points, or 1.7%, to its own record set the day before, while the Nasdaq composite jumped 2.6%.

Palantir Technologies helped lead the way and surged 29.5% after its CEO, Alex Karp, said its overall revenue leaped 93% in what he called an “otherworldly” quarter. Besides reporting a stronger profit for the spring than analysts expected, the AI company also raised its revenue forecast for the full year of 2026.

Caterpillar climbed 5.6% after the heavy-equipment maker likewise reported stronger profit and revenue than analysts expected. It was the first time Caterpillar made more than $20bn in sales and revenue in a quarter, and its CEO, Joe Creed, said it was seeing strong order rates and a growing backlog across its main businesses.

Caterpillar is also benefiting from the AI boom through increased orders for turbines used to power datacenters, among other things.

They are the latest companies to deliver even better profits for the latest quarter than investors expected, after strong results from Amazon, Microsoft and others. Coming into this week, companies in the S&P 500 index were on track to deliver growth of nearly 50% in earnings per share for the spring from a year earlier, according to FactSet.

That would be the biggest such jump since 2021, when the economy was roaring back to life after cratering in the Covid-19 pandemic. With corporate profits up so much, when stock prices are still roughly where they were two months ago, stocks don’t look as expensive as they did before, according to Phil Segner, a co-portfolio manager at the Leuthold Group.

Brent crude, the international standard, sank 5.3% to $79.36 per barrel as hope once again took over from fear in the oil market. It had swung sharply between $72 and $102 through July on uncertainty about when the war with Iran would allow oil tankers to freely exit the Gulf again to deliver crude around the world.

The yield on the 10-year treasury fell to 4.62% from 4.70% Monday and from 4.75% at the end of last week. That’s a notable move for the bond market, though it remains well above its 3.97% level from before the war with Iran.

Higher yields make it more expensive for all kinds of Americans to borrow money, from homebuyers looking for a mortgage to big companies looking to build AI datacenters.

Stocks of computer chip companies also strengthened on Wall Street, where gains of 2.6% for Nvidia, 6.6% for Broadcom and 7.6% for Micron Technology were some of the strongest forces lifting the S&P 500.