Dow, S&P 500 hit record highs as AI earnings and oil drop lift stocks

• Palantir surged 30% after beating earnings and raising guidance, while Micron jumped 7% and the Philadelphia Semiconductor Index gained nearly 7%, extending the tech sector's recovery from July's selloff
• Caterpillar rose 6% after raising its full-year revenue outlook, citing growing demand for equipment linked to AI data center expansion
• Oil prices fell sharply (WTI down 5.69% to $75.77) on hopes of US-Iran diplomatic breakthrough, easing inflation concerns and reducing Fed rate hike probability from 67.2% to 56.9% for September

Market Summary: Record Highs Driven by AI Earnings and Oil Decline

Market Performance:

U.S. equity markets surged to record highs on August 4, 2026, with the Dow Jones climbing 912 points (+1.7%) to close at 54,090.66, the S&P 500 rising 1.8% to 7,737.70, and the Nasdaq gaining 2.6% to 26,581.99. The Philadelphia Semiconductor Index jumped nearly 7%, recovering from July's selloff.

Key Drivers:

*AI Earnings Momentum:* Palantir Technologies surged 30% after beating Q2 expectations and raising annual revenue guidance, marking its largest single-day gain since February 2024. Semiconductor stocks rallied strongly, with Micron advancing 7% and Marvell Technology up 12%. Caterpillar jumped 6% after raising its full-year revenue outlook, citing robust demand for AI data center equipment while noting tariff costs would come in at the lower end of guidance.

*Earnings Beat Rate:* 85.2% of 304 S&P 500 companies reporting through Friday exceeded analyst estimates, significantly above the long-term average of 67.5%.

*Oil Price Decline:* WTI crude fell 5.69% to $75.77/barrel and Brent crude dropped 5.26% to $79.36/barrel amid diplomatic progress between the U.S. and Iran. Treasury Secretary Scott Bessent indicated a deal to reopen the Strait of Hormuz could be reached within days.

Fed Implications:

Lower oil prices eased inflation concerns, reducing the probability of a September Fed rate hike to 56.9% from 67.2%.

Economic Data:

June job openings declined, primarily in healthcare and social assistance, though hiring activity and low layoffs suggested labor market stability. Investors await Friday's nonfarm payrolls report for further Fed policy guidance.

Notable Movers:

Amazon declined 2% following Jeff Bezos's disclosure of plans to sell approximately $4 billion in company stock.