The U.S. stock market is approaching a record high on Tuesday, driven by mounting corporate profits and declining oil prices. The S&P 500 climbed 1.2%, aiming to surpass its peak from a few months ago. The Dow Jones Industrial Average rose 767 points, equating to a 1.4% increase, setting its own record from the previous day. Meanwhile, the Nasdaq composite rose 1.8% by 11:15 a.m. Eastern time.
Concerns persist over inflation and geopolitical tensions, such as the conflict in Iran, as well as a potential stock market bubble due to enthusiasm around artificial intelligence technology. Nonetheless, Wall Street’s upward trend owes much to companies’ soaring profits. Historically, stock prices align with corporate earnings over time.
Palantir Technologies contributed significantly, with a 26.4% jump in stock value. CEO Alex Karp described the company’s revenue increase of 93% as “otherworldly.” The company reported profits surpassing analysts’ spring forecasts and raised its full-year revenue outlook for 2026.
Caterpillar experienced a 5.7% rise in stock value following a stronger-than-expected quarterly profit and revenue announcement. Achieving over $20 billion in sales and revenue for the first time, CEO Joe Creed notes strong order rates and a growing backlog. The company also benefits from the AI boom due to increased orders for turbines to power data centers.
McDonald’s impressed with a 1.7% stock increase after surpassing profit expectations despite economic challenges faced by consumers. Success extends to other companies like Amazon and Microsoft reporting robust profits, adding to investor optimism.
According to FactSet, S&P 500 companies are anticipated to show nearly 50% earnings per share growth for spring compared to last year. This represents the largest increase since the post-pandemic rebound in spring 2021.
Receding oil prices further bolstered stock gains. Brent crude fell 3.8% to $80.58 per barrel, alleviating inflation worries. Oil market fluctuations have persisted amid uncertainty over the Iran conflict. Drops in oil prices ease Wall Street concerns, influencing lower yields in the bond market and reducing overall economic pressure.
As of Tuesday, the yield on the 10-year Treasury decreased to 4.64% from Monday’s 4.70%, showing a decline from last week’s 4.75%. Despite remaining above the 3.97% level before Iran conflict, lower yields reduce borrowing costs, benefiting homebuyers and companies building AI data centers.
U.S. economic reports display resilience despite ongoing inflation challenges. One report indicates 7.4 million job openings at the end of June, a slight decrease from May but aligned with expectations.
International stock markets also saw moderate gains across Europe and Asia. South Korea’s Kospi experienced a more significant 1.6% rise, driven by Samsung Electronics and SK Hynix amid AI trends. The Kospi recently faced sharp swings, dropping 5.1% and rising 17.9% in previous days.
Computer chip companies saw gains in the U.S. market, with Broadcom rising 5.1%, Nvidia 1.7%, and Micron Technology 7.6%, contributing to S&P 500 strength.