Caterpillar and Palantir's blockbuster earnings wiped away fears that massive AI spending would squeeze corporate margins. The Dow Jones jumped 907 points to 54,091, the S&P 500 climbed 1.79% to 7,736, and the Nasdaq surged 2.59% to 26,585, all fresh records. Palantir led the charge with a 29.5% spike after raising its full-year forecast, marking the software company's best day since February 2024. Caterpillar gained 5.6% on stronger power-generation demand from AI data center expansion.
The earnings season is running hot. Of 304 S&P 500 companies that reported, 85.2% beat expectations, crushing the historical 67.5% average. Semiconductor stocks caught fire too, with the Philadelphia chip index up 6.6% and now recovering from July's brutal 20.6% drop. Investors are betting chipmakers will be the real winners in the infrastructure arms race.
Beyond US shores, the rally spread globally. Europe's STOXX 600 hit a record 656.86 points, up 0.73%. The MSCI All Country World Index rose 1.30% to a new intraday high. Oil prices collapsed 5.3% to $79.36 a barrel as traders priced in potential progress on Iran tensions and reduced shipping risks around the Strait of Hormuz. Cheaper energy meant softer inflation signals, shifting bets on Fed rate decisions away from a September hike.
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