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

Hormuz Talk and Earnings Push Indexes to Records

The S&P 500 and the Dow are at record highs Tuesday on two things working at the same time: crude oil broke lower on Hormuz deal talk and Palantir delivered an earnings report that changes the AI software conversation. Treasury Secretary Scott Bessent said the United States and Iran were in talks and that an agreement to reopen the Strait of Hormuz could arrive today or tomorrow. WTI fell 5% toward $76. Brent dropped 4% to around $80.

Caterpillar is up 10% after beating estimates and raising revenue guidance, which gives the Dow a growth story outside of technology. Lower oil, real AI earnings and an industrial beat is better breadth than anything the market has had in weeks.

Iran has pushed back on claims that direct negotiations with Washington are under way. The market is trading a possible deal, not a signed one. If diplomacy falls apart and crude recovers, the rate pressure comes right back.

The Dow gained 772 points or 1.4%. The S&P 500 is up 0.5%. The Nasdaq Composite added 0.9%.

Daily S&P 500 Index (SPX) Technical Analysis

The S&P 500 Index is trading at a record high after taking out 7620.90, reaffirming the long-term uptrend. Using the last completed upswing from the 7313.92 main bottom to 7620.90, the move measured 306.98 points. A 50% extension of that swing projects an initial upside target at 7774.39.

The former record high at 7620.90 becomes the first support level. A sustained move below it would signal weakness and the possibility of a retracement, but not a change in trend. The major support and trend indicator is the 50-day moving average at 7478.40.

Daily Dow Jones Industrial Average (DJI) Technical Analysis

The Dow Jones Industrial Average is trading at a record high after taking out the former record high at 53289.30, reaffirming the long-term uptrend. Using the last completed upswing from the 51542.06 main bottom to 53289.30, the move measured 1747.24 points. A 50% extension of that swing projects an initial upside target at 54162.92.

The former record high at 53289.30 becomes the first support level. A sustained move below it would signal weakness and the possibility of a retracement, but not a change in trend. The major support and trend indicator is the 50-day moving average at 51838.06.

Palantir Shows AI Software Can Deliver

Palantir is up more than 20% after posting revenue growth of 93% to $1.94 billion, ahead of the $1.8 billion estimate. Commercial revenue surged 149% to $764 million. Government revenue rose 90% to $809 million. Those numbers are not built on a future promise. Customers are paying now.

The company is selling AI sovereignty. Businesses and governments want artificial intelligence without handing their data and internal systems to the large language model providers, and Palantir is the company positioned for that demand. The stock had lost 29% this year as traders questioned whether the AI trade had become too expensive. Tuesday’s report brought buyers back because the growth matched what the valuation was already pricing in.

Full-year revenue guidance came in at $8.15 billion to $8.158 billion with commercial revenue above $3.424 billion. That raises the bar for every AI software name reporting this week. Palantir proved the software side of the trade can earn. The next companies have to do the same or the rally stays a one-stock story.

Caterpillar Gives the Dow Industrial Strength

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.