Dow and 500 hit records as Hormuz deal nears: What to know
U.S. stocks raced to fresh records Tuesday as the Dow and 500 stock benchmark climbed after Treasury Secretary Scott Bessent said a deal to reopen the Strait of Hormuz could land within a day or two, oil prices tumbled, and AI-linked tech names led the charge. Traders also cheered strong earnings from AI software and industrial suppliers, extending a rebound after a volatile July rotation in the AI trade.
Key Takeaways
- The S&P 500 and Dow Jones Industrial Average scaled to fresh record highs Tuesday on falling oil and strong earnings.
- Bessent told CNBC a U.S.-Iran deal to reopen the Strait of Hormuz could come Tuesday or Wednesday.
- WTI crude fell about 5% to around $75 a barrel; Brent also dropped about 5% near the high $70s.
- Palantir surged on blowout results, while Caterpillar jumped after beating estimates and citing AI data-center demand.
- More than 84% of S&P 500 companies reporting so far have beaten earnings expectations, per FactSet.
Why did stocks hit records after Bessent spoke?
Investors piled into equities after Bessent said on CNBC's "Squawk Box" that the U.S. is "in talks with the Iranians" and that "there is a chance we may have a deal today or tomorrow to open the Strait and move towards a more normalized position in this conflict." He also said reopening would mean "freedom of movement" for commercial ships.
That diplomacy hope knocked energy prices lower. West Texas Intermediate futures were down about 5% near $75 a barrel, while Brent declined about 5% to roughly $79, according to CNBC's live market coverage. Business Insider reported Brent sliding further below $80 as optimism grew.
Cheaper oil eased a major macro worry that had hung over markets amid Middle East conflict and shipping-lane risk. The 10-year Treasury yield also eased about 5 basis points to around 4.62%, Business Insider noted midday.
How big were the gains for the Dow and S&P?
CNBC reported the S&P 500 gained about 1.8% and reached a fresh high for the first time since June, while the Nasdaq Composite popped about 2.5%. The Dow surged more than 1,000 points, or about 2%, in the session tally highlighted in that coverage.
Earlier Tuesday afternoon, Business Insider had the Dow up about 904 points near 54,083, the S&P 500 near 7,713 (up 1.48%), and the Nasdaq 100 up nearly 3%. Either way, major averages were in record territory as risk appetite returned.
Beyond tech, financials advanced about 1%, with Goldman Sachs among leaders, while industrials and materials rose nearly 2% apiece, CNBC said.
What does the AI trade have to do with today's rally?
Tech led the advance, jumping about 4% as investors rotated back into AI and chip names that struggled in July. Palantir shares rocketed roughly 27%–29% after CEO Alex Karp described commercial results as "otherworldly," powered by AI sovereignty demand and a nearly 150% surge in U.S. commercial revenue.
Chip stocks continued their comeback: Micron gained about 7% and Marvell about 14%, per CNBC. Caterpillar, a Dow standout, surged after beating Q2 estimates and pointing to strong demand tied to the AI data-center buildout. Amazon, which had just notched a $3 trillion valuation, dipped about 2% after Jeff Bezos filed to sell around $4 billion in shares.
eToro's Bret Kenwell told Business Insider the rebound in large AI spenders may signal a "long-overdue rebalancing" as compressed valuations and tangible AI revenue growth pull Wall Street back toward mega-cap tech. For more on how AI is reshaping markets and industry, see Future Tech & AI Wonders on BlasterPost.
Piper Sandler strategists cautioned that new highs are bullish but broader market participation is still needed for a sustainable short-term uptrend. SpaceX's first-ever earnings after the close also kept traders bracing for more volatility this week.