US stocks closed at record highs Tuesday as a cluster of upbeat AI-linked earnings and a sharp drop in oil prices overrode lingering skepticism about the sustainability of the rally. The S&P 500 rose 1.81% to 7,737.70, its first closing record since July 2, while the Dow Jones Industrial Average added 1.72% to 54,090.66, notching an all-time high. The Nasdaq Composite climbed 2.58% to 26,581.99.

Palantir and Caterpillar lead the charge

Palantir Technologies surged nearly 30%, its largest single-day percentage gain since February 2024, after raising its annual revenue forecast. Caterpillar, often treated as a proxy for global industrial demand, rose about 6% after lifting its own revenue-growth outlook, citing stronger demand for power-generation and construction equipment from expanding AI data centres. The machinery maker contributed more than 300 points to the Dow’s advance, making it the index’s biggest single driver.

Oil slides on Iran diplomacy hopes

Crude prices fell roughly 5% after a Qatari official told Reuters that negotiations were continuing and US Treasury Secretary Scott Bessent said a deal to reopen the Strait of Hormuz could be reached within two days. Jack Ablin, chief investment strategist at Cresset Capital Management, told Reuters he sensed "not one ounce of skepticism among investors, from oil to interest rates to equities," though he added that a handful of earnings reports may not justify fresh index records.

Breadth and semiconductors confirm the move

The Philadelphia Semiconductor Index jumped nearly 7%, heading for a fourth straight daily gain after a 20.6% plunge in July. The S&P 500 technology sector climbed 4.5%, leading all eleven major groups. Advancing issues outnumbered decliners by 2.11-to-1 on the NYSE and 2.95-to-1 on the Nasdaq. The S&P 500 posted 25 new 52-week highs against three lows; the Nasdaq recorded 117 highs versus 43 lows.

Earnings season beats history but strategist questions the record

Of the 304 S&P 500 companies that had reported second-quarter results as of Friday, 85.2% beat profit estimates, well above the long-term average of 67.5%, according to LSEG data cited by Reuters. Every major sector recorded year-over-year profit growth. SpaceX shares rose more than 8% ahead of its first quarterly report since going public, while Pfizer gained 1.1% on an upbeat quarter. McDonald’s edged up 0.1% despite disappointing results.

Labor data kicks off busy week

On the economic front, US job openings fell in June, driven by a sharp decline in healthcare and social assistance. Stronger hiring and low layoffs pointed to a still-stable labor market. The report is the first in a series culminating in Friday’s government payrolls release, which will test whether the market’s confidence in a soft landing remains warranted.