The S&P 500 closed at a record high on Tuesday, surging 1.79% to break above 7,700 for the first time, while the Dow Jones Industrial Average rocketed 907 points to finish at 54,085.88, a 1.71% gain that marked its own milestone.
The broad rally was fueled by a convergence of positive catalysts. Treasury Secretary Scott Bessent signaled that the US and Iran could reach a deal this week to reopen the Strait of Hormuz, sending crude oil prices tumbling roughly 5% on Monday and further easing inflation fears.
West Texas Intermediate crude settled near $80 per barrel, well off its recent highs above $85, as traders priced in the prospect of resumed oil transit through the strategically vital waterway. The drop in energy costs provided a tailwind for consumer-facing stocks and the broader market.
Technology shares led the charge, rebounding sharply after a volatile rotation in the AI trade had rattled investors throughout July. Palantir Technologies surged 29% following blowout second-quarter results that showed US commercial revenue soaring nearly 150%, while other mega-cap tech names also posted strong gains.
The Nasdaq climbed alongside its major counterparts, completing a powerful three-index sweep that Wall Street analysts attributed to renewed risk appetite. Investors appeared to shake off concerns about massive AI infrastructure spending that had weighed on tech valuations in recent weeks.
The record-setting session came as second-quarter earnings season continued to deliver strong results across multiple sectors. Big tech companies reported robust profits, though some investors remained cautious about the pace of capital expenditure on artificial intelligence projects.
Looking ahead, traders are focused on SpaceX earnings after the bell and an upcoming ISM services report that could shape Federal Reserve rate-cut expectations. The combination of cooling oil prices and strong corporate earnings has bolstered hopes for a soft economic landing.
The milestone represents a dramatic recovery from the turbulence that gripped markets in early summer, when escalating Middle East tensions and uncertainty over AI spending triggered sharp selloffs. With geopolitical risks receding and fundamentals holding firm, Wall Street appears poised to extend its rally.
Sources: CNBC, CNN Business, Yahoo Finance
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