Stocks hit records as earnings surge and oil falls

U.S. stocks climbed to record highs Tuesday, powered by stronger-than-expected corporate earnings, a slide in oil prices and hopes that a deal could soon reopen the Strait of Hormuz.

The S&P 500 rose 136 points, or 1.8%, to 7,736, clearing its previous all-time high from early June. The Dow Jones Industrial Average jumped 907 points, or 1.7%, to another record, while the Nasdaq Composite gained 2.6%.

Treasury Secretary Scott Bessent helped fuel the rally when he told CNBC that a U.S. deal with Iran could be close. “I think 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,” Bessent said.

Investors have been watching the Strait of Hormuz because of its importance to global oil shipments. Hopes for a reopening helped push Brent crude, the international benchmark, down about 5% to roughly $79 a barrel Tuesday. Oil had swung between $72 and $102 through July amid uncertainty over when the war with Iran would allow tankers to move freely through the Persian Gulf again.

Lower oil prices could ease pressure on inflation, while fresh government labor data also reassured investors. The Job Openings and Labor Turnover Survey showed hiring in the United States remained solid and layoffs stayed modest.

“The equity rally is being driven by blowout earnings from the day’s two most important reports (CAT and PLTR), positive remarks from Bessent on CNBC about the potential for a deal to reopen Hormuz arriving within the next 24-48 hours, and a JOLTS report that wasn’t as hot as feared,” Adam Crisafulli, head of Vital Knowledge, told investors in a note cited by CBS News.

Still, investors hoping for peace in the Middle East have faced setbacks before, with President Trump and other U.S. officials previously signaling that a breakthrough was near before fighting resumed.

Corporate earnings provided another major boost. Coming into the week, companies in the S&P 500 were on track to post nearly 50% growth in earnings per share for the spring compared with a year earlier, according to FactSet. That would mark the strongest such jump since 2021, when the economy was rebounding from the COVID-19 pandemic.

Palantir Technologies was among the day’s biggest winners, surging about 29% after CEO Alex Karp said revenue jumped 93% in what he called an “otherworldly” quarter. The company reported stronger spring profit than analysts expected and raised its revenue forecast for 2026.

Caterpillar also rallied after reporting profit and revenue that topped forecasts. Shares rose about 6%, and the heavy-equipment maker posted more than $20 billion in quarterly sales and revenue for the first time. CEO Joe Creed said the company was seeing strong order rates and a growing backlog across its main businesses. The Guardian reported that Caterpillar is also benefiting from the AI boom through increased orders for turbines used to power data centers.

Chip stocks added to the gains, with Nvidia, Broadcom and Micron Technology rising sharply. Those advances helped offset a 9.7% drop for Chipotle Mexican Group, which fell on concerns that future profits could be hurt after the chain removed jalapeños from some restaurants following a salmonella outbreak. Chipotle said Minnesota health officials had no ongoing concerns with the company.

The Dow and S&P 500 are now up about 12% and 13% this year, respectively, while the Nasdaq has risen 14%, recovering from losses after the Iran war began in late February.