Key facts
- The S&P 500 and Dow Jones Industrial Average closed at record highs on Tuesday.
- Strong earnings forecasts from AI-related companies like Caterpillar and Palantir boosted the market.
- Caterpillar's stock jumped 5.6% after raising its annual revenue forecast due to AI data center demand.
- Palantir Technologies soared 29.5% after also raising its annual revenue forecast.
- Hopes for a Middle East diplomatic resolution contributed to a roughly 5% drop in crude oil prices.
- European shares closed at a fresh all-time high on Wednesday, with the STOXX 600 index up 0.04%.
The S&P 500 and Dow Jones Industrial Average closed at record highs on Tuesday, propelled by strong earnings reports and optimism surrounding a potential diplomatic resolution in the Middle East. AI-related companies like Caterpillar and Palantir provided significant boosts, with Caterpillar's stock jumping 5.6% after raising its annual revenue forecast due to increased demand for its equipment from AI data center construction. Palantir Technologies soared 29.5% after also raising its annual revenue forecast.
Hopes for a deal to reopen the Strait of Hormuz, mentioned by U.S. Treasury Secretary Scott Bessent, contributed to a roughly 5% drop in crude oil prices. This decline in oil prices also reduced expectations for a Federal Reserve rate hike in September. The broader market sentiment was positive, with chip stocks and the S&P 500 tech sector showing substantial gains.
European shares closed at a fresh all-time high on Wednesday, with the pan-European STOXX 600 index gaining 0.04% to 657.14 points. Upbeat corporate earnings reports helped outweigh concerns over geopolitical narratives in the Middle East.
Overall, corporate earnings this quarter have been robust, with a high percentage of S&P 500 companies beating estimates. The labor market also showed signs of stability, with job openings declining in June but hiring remaining strong and layoffs low.