The US stock market rallied to records on Tuesday as profits kept piling up for companies and as oil prices eased.
- The S&P 500 rose 136.02 points, or 1.8%, to 7,736.52, and the main measure of Wall Street's health topped its prior all-time high set a couple of months ago.
- The Dow Jones Industrial Average rose 907.47 points, or 1.7%, to 54,085.88, adding to its own record set the day before.
- The Nasdaq composite rose 671.10 points, or 2.6%, to 26,584.99.
Despite worries about high inflation, the war in Iran, frustration with the economy, and a possible bubble in stock prices because of the boom in artificial-intelligence technology, Wall Street hit its latest apex and rewarded investors who remained patient because profits keep soaring for companies, the
AP reports. Stock prices tend to follow the path of corporate earnings over the long term.
- Palantir Technologies helped lead the way and surged 29.5% after CEO Alex Karp said its overall revenue leaped 93% in what he called an "otherworldly" quarter. Besides reporting a stronger profit for the spring than analysts expected, the AI company also raised its revenue forecast for the full year of 2026.
- Caterpillar climbed 5.6% after the heavy-equipment maker likewise reported stronger profit and revenue than analysts expected. It was the first time Caterpillar made more than $20 billion in sales and revenue in a quarter, and CEO Joe Creed said it's seeing strong order rates and a growing backlog across its main businesses. Caterpillar is also benefiting from the AI boom through increased orders for turbines used to power data centers, among other things.
They're the latest companies to deliver even better profits for the latest quarter than investors expected, following strong results from Amazon, Microsoft, and others. Coming into this week, companies in the S&P 500 index were on track to deliver growth of nearly 50% in earnings per share for the spring from a year earlier, according to FactSet. That would be the biggest such jump since 2021, when the economy was roaring back to life after cratering in the COVID-19 pandemic. With corporate profits up so much, when stock prices are still roughly where they were two months ago, stocks don't look as expensive as they did before, according to Phil Segner, a co-portfolio manager at the Leuthold Group.
- Also helping stocks on Tuesday was another drop for oil prices. Brent crude, the international standard, sank 5.3% to $79.36 per barrel as hope once again took over from fear in the oil market.
- Reports on the US economy, meanwhile, showed it remains resilient even though inflation remains worse than anyone would like. One said US employers were advertising nearly 7.4 million job openings at the end of June, a slight slowdown from May's level but close to economists' expectations.
Stocks of computer chip companies also strengthened on Wall Street, where gains of 2.6% for Nvidia, 6.6% for Broadcom, and 7.6% for Micron Technology were some of the strongest forces lifting the S&P 500. They more than offset a drop for Chipotle Mexican Group, which fell 9.7% on fears that future profits could be hurt after the chain removed jalapeños from some of its restaurants following a salmonella outbreak. Chipotle said that Minnesota health officials have no ongoing concerns with it.
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