U.S. stocks pushed toward fresh records Tuesday after Treasury Secretary Scott Bessent said an agreement to reopen the Strait of Hormuz could come within days.
A stronger-than-expected earnings season added to the optimism, as major companies including equipment giant Caterpillar and software firm Palantir Technologies posted second-quarter results that topped Wall Street forecasts.
By afternoon trading, the S&P 500 was up 142 points, or 1.9%, at 7,731, leaving the benchmark index on pace to eclipse its prior record from June 2. The Dow Jones Industrial Average surged 1,007 points, also a 1.9% gain, while the tech-focused Nasdaq Composite advanced 2.6%.
Markets have been betting that a potential end to the Iran war could ease pressure on global energy markets and help cool inflation. Fresh labor-market data also supported sentiment: the government’s Job Openings and Labor Turnover Survey, known as JOLTS, showed U.S. hiring remains solid and layoffs remain relatively limited.
“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,” Wall Street analyst Adam Crisafulli, head of Vital Knowledge, told investors in a note.
Still, traders have reason to be cautious. Hopes for peace in the Middle East have faded before, including after President Trump and other U.S. officials suggested a breakthrough was near, only for fighting to continue.
For the year, the S&P 500 and Dow are each ahead 13%, while the Nasdaq has gained 14%. The rebound has come after stocks fell in the weeks following the late-February outbreak of war in Iran, and despite lingering worries about an AI-driven stock bubble.
Strongest growth in years
The market’s climb has been powered largely by surging corporate profits, a core driver for investors because stock prices generally track earnings over time. Entering the week, S&P 500 companies were on pace to report nearly 50% growth in spring earnings per share compared with a year earlier, according to FactSet.
That would be the biggest such jump since the spring of 2021, when the economy was emerging from the COVID-19 pandemic. Stock prices today look more in line with corporate profits, said Phil Segner, a co-portfolio manager at the Leuthold Group.
Shares of Palantir Technologies jumped 29.3% after CEO Alex Karp said the defense tech company’s revenue leaped 93% in what he called an “otherworldly” quarter. Besides reporting a stronger profit for the spring than analysts expected, the company also raised its revenue forecast for the full year of 2026.
Caterpillar was another strong stock performer on Tuesday, with its shares climbing 6.5% after the heavy-equipment maker reported stronger-than-forecast profit and revenue. 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.
Lower oil prices
Stocks were helped by a drop in oil prices on Tuesday. Brent crude, the international benchmark, sank 4.9% to $79.64 per barrel as hope once again took over from fear in the oil market. It had swung sharply between $72 and $102 through July amid uncertainty about when the war with Iran would allow oil tankers to transit the Persian Gulf freely again to deliver crude around the world.
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Bessent told CNBC on Tuesday that a U.S. deal with Iran could soon be within reach.
“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 told the network.
Alain Sherter
contributed to this report.
