The U.S. stock market is rallying toward a record as company profits rise and oil prices decrease. The S&P 500 index increased by 1.2% and is close to surpassing its all-time high set earlier. The Dow Jones Industrial Average rose by 767 points, or 1.4%, reaching a new record after its previous day’s achievement. The Nasdaq composite climbed 1.8% as of 11:15 a.m. Eastern time.
Despite concerns regarding high inflation, tensions with Iran, and fears of a potential stock price bubble spurred by enthusiasm for AI technology, Wall Street is rising largely due to significant profit growth among companies. Stock prices generally align with corporate earnings over time.
Palantir Technologies saw a remarkable jump of 26.4% after CEO Alex Karp reported a 93% increase in overall revenue, describing the quarter as ‘otherworldly.’ The AI company exceeded profit expectations for the spring and also revised its revenue forecast for the full year 2026 upward.
Caterpillar also performed well, climbing 5.7% following higher-than-expected profit and revenue reports. It achieved over $20 billion in sales and revenue for a quarter for the first time. CEO Joe Creed cited strong order rates and a growing backlog across key sectors. The AI boom is further benefiting Caterpillar through increased orders for turbines used in data centers.
McDonald’s rose by 1.7% after surpassing analysts’ profit expectations for the spring despite customers facing challenges from high gasoline prices and economic concerns. Both companies, along with major players like Amazon and Microsoft, are delivering stronger-than-expected profits. S&P 500 companies are on track for nearly a 50% earnings per share growth for the spring compared to the previous year, marking the largest increase since spring 2021 as the economy rebounded from the COVID-19 pandemic.
As corporate profits climb, and stock prices remain similar to levels from two months ago, the stocks appear less costly according to Phil Segner, a co-portfolio manager at the Leuthold Group.
Decrease in oil prices also contributed to the positive trend on Tuesday. Brent crude dropped 3.8% to $80.58 per barrel, driven by optimism replacing fear in the oil market. Previously, oil prices fluctuated between $72 and $102 during July due to uncertainties around the impact of the conflict in Iran on oil tanker movements in the Persian Gulf. The reduction in oil prices eased some of Wall Street’s inflation concerns, leading to lower yields in the bond market.
The yield on the 10-year Treasury fell to 4.64% from 4.70% the previous day and 4.75% at the end of last week. This reduction alleviates borrowing costs for homebuyers and companies building AI data centers, though it remains higher than the pre-Iran conflict level of 3.97%.
Reports indicate that the U.S. economy remains robust despite persistent high inflation rates. A report revealed nearly 7.4 million job vacancies at the end of June, a slight decline from May but within economists’ expectations.
Internationally, stock indexes experienced moderate increases across Europe and Asia. South Korea’s Kospi saw a more significant change, rising 1.6%. Dominated by companies like Samsung Electronics and SK Hynix, known for AI-related volatility, the Kospi had dropped 5.1% and soared 17.9% over the previous two days.
On Wall Street, technology stocks gained strength. Broadcom increased by 5.1%, Nvidia by 1.7%, and Micron Technology by 7.6%. These gains contributed significantly to the S&P 500’s rise.
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