Dow Jones and S&P500: Hit Records on Iran Deal Hopes and Palantir, Caterpillar

Caterpillar beat second-quarter estimates and raised revenue growth guidance. The company also said full-year tariff costs should come in at the lower end of its earlier range. That gives the Dow a reason to run that has nothing to do with cloud computing or AI models.

Demand for construction, mining and infrastructure equipment is holding up even with rates elevated. The industrials are pulling higher with Caterpillar and that is broader participation than a rally built on a handful of megacap technology names. Lower oil is taking another concern off the table for the rate-sensitive parts of the market at the same time.

Stocks in the News

Micron gained 4% and Marvell rose 11% as chip buyers followed the AI software results. On Semiconductor added 7% after topping earnings and margin expectations. McDonald’s rose 1.9% after beating on earnings despite a small revenue miss. Merck and Pfizer moved higher after better-than-expected results and stronger guidance.

Wayfair fell 4% despite beating estimates. DigitalOcean lost 11% after its report. Whirlpool was little changed after missing on earnings, revenue and lowering guidance. The market is not buying every beat. It is rewarding companies that show stronger revenue, margins or an improved outlook and selling the ones that cannot.

What to Watch

The S&P 500 and Dow have record highs, falling oil and two strong earnings reports working together. The risk is that the Hormuz story has not produced a confirmed agreement or normal shipping flows. If diplomacy breaks down and crude turns back, the same market celebrating lower inflation risk has to price it back in.

Palantir and Caterpillar gave buyers real reasons to stay involved. SpaceX reports later Tuesday. The rest of the AI group needs to show that Palantir’s quarter was not a one-stock event or the rally narrows back to the names that were already carrying it.

Both indexes are trading above their former record highs and the uptrends are confirmed. The old highs are the first support level and the rallies have room to extend as long as crude stays weak and earnings keep cooperating. A reversal in oil or a miss from the next round of reports is what brings sellers back.

More Information in our Economic Calendar.