The S&P 500 closed at an all-time high Tuesday for the first time in two months, as strong corporate earnings, falling oil prices and renewed optimism over a potential agreement to reopen the Strait of Hormuz sent stocks surging across the board.
The S&P 500 rose 1.8% to close at 7,737, surpassing its previous record of 7,620.90 set on June 2 and pushing its year-to-date gain to roughly 11.4%. The Dow Jones Industrial Average soared 907 points, or 1.7%, closing above 54,000 for the first time in its history — its second consecutive record close after notching its first all-time high in over a month on Monday. The Nasdaq Composite surged 2.6%, though it remains about 2% below its own record high set in early June.
The record capped a dramatic two-month recovery. After a selloff in semiconductor and AI stocks pulled the S&P 500 nearly 5% from its June peak and pushed the Nasdaq close to correction territory in late July, the market staged a stunning reversal to kick off August. Since a low point on July 29, the Nasdaq has surged nearly 9%.
Tuesday’s catalyst was a combination of standout earnings and improving geopolitical sentiment. Palantir surged 29% — its strongest single-day gain in more than two years — after the data analytics company delivered blowout second-quarter results and raised its full-year revenue forecast. Caterpillar climbed 5.6% after the heavy-equipment maker also beat expectations on both profit and revenue. The Philadelphia Semiconductor Index added more than 6.5% as chip stocks continued to recover, and the Russell 2000 index of small-cap stocks also hit a record high, signaling broad participation in the rally rather than a handful of mega-cap names carrying the market.
Oil prices fell on the day, easing inflation concerns and boosting sentiment, as traders monitored signs that the U.S. and Iran may be moving toward an agreement to reopen the Strait of Hormuz. Treasury yields also declined, with the 10-year yield falling five basis points to 4.62%.
The rally comes as investors navigate a new chapter for the Federal Reserve under Chairman Kevin Warsh, who recently took over from Jerome Powell. With inflation remaining stubborn, the Fed is widely expected to hold rates steady or even consider hikes in the months ahead — a backdrop that has added to market volatility this summer even as stocks have proved resilient.