Dow closes above 54,000 for the first time as earnings season impresses

The Dow Jones Industrial Average closed above 54,000 points for the first time on August 4, while the S&P 500 notched its first record closing high in two months, as strong corporate earnings and easing tensions around a key Middle East shipping route lifted investor sentiment.

A record powered by earnings

The Dow jumped 907.47 points, or 1.71%, to close at 54,085.88, notching back-to-back record highs after clinching its first all-time high in a month the previous session. The S&P 500 gained 136.02 points, or 1.79%, to finish at a record 7,736.52, surpassing its previous closing peak from early June, while the Nasdaq Composite surged 671.10 points, or 2.59%, to 26,584.99, though it remained about 2% below its own record set earlier in the summer.

Palantir and Caterpillar lead the way

Palantir Technologies soared 29.5%, its second-best trading day on record, after chief executive Alex Karp said quarterly revenue jumped 93% to $1.94 billion in what he called an "otherworldly" quarter, with U.S. commercial revenue up 149% and the company raising its full-year revenue guidance by roughly $498 million to about $8.15 billion. Caterpillar, widely watched as a bellwether for the global industrial economy, climbed 5.6% after raising its own annual revenue growth forecast, with executives crediting demand for its power-generation and construction equipment tied to the ongoing buildout of AI data centers; the move made Caterpillar the single biggest contributor to the Dow's advance, adding roughly 280 points to the index.

A strong earnings season overall

The gains came in the middle of a robust second-quarter earnings season: of the 304 S&P 500 companies that had reported results by the prior Friday, 85.2% had beaten analyst estimates, well above the long-term average of 67.5%. Oil prices fell more than 5% on the day on growing conviction that a deal to reopen the Strait of Hormuz to commercial shipping was close, while Treasury yields pulled back after spiking the previous week. Investors were also parsing SpaceX's first-ever earnings report as a newly public company, with shares of the rocket maker rising 9% to $125, still below its IPO target price of $135. Markets traded in a narrower band in the sessions that followed, with major indexes moving modestly as investors weighed inflation data and looked ahead to Nvidia's closely watched earnings report later in the month.