U.S. stocks hit fresh records as AI and chip shares power a broad rally

U.S. equities ripped higher across the board overnight, fueled by upbeat earnings and improving geopolitical sentiment. The Dow Jones Industrial Average jumped 1.71% to close above 54,000 for the first time, notching a new record. The S&P 500 gained 1.79% to a fresh high, while the Nasdaq Composite surged 2.59% as technology led. The rebound has been swift: after hovering near one-month lows just days ago, major indexes pushed to new peaks as risk appetite returned. Oil slides as a Strait of Hormuz interim deal nears Markets are increasingly focused on signs of de-escalation around the Strait of Hormuz. Axios reported the U.S., Iran and Oman are close to a 60-day interim arrangement expected to be announced locally on Wednesday, aimed at reopening the strait, restoring the U.S.-Iran ceasefire and setting the stage for follow-on nuclear talks. With fears of supply disruption easing, crude sold off sharply. WTI fell 5.58% on the day, is down 13.27% in August and is trading around $73.50. Brent broke below $80, touched $77.70 and is down about 12% this month. Under the proposed routing, inbound traffic would take the northern route near Iran’s coast and outbound vessels the southern route near Oman’s coast, coordinated by Oman and Iran. A key clause targets clearing mines in the central shipping lane within 30 days. Bloomberg reported Iran has softened its position and is, for the first time, considering allowing European participation in demining to boost confidence among shippers and insurers. No tolls or related fees would be charged during the 60-day period. Over the longer term, Oman has proposed a "voluntary fund" modeled after the Malacca Strait, financed by Gulf states and relevant European member states of the International Maritime Organization (IMO), to support maintenance, search and rescue, and security. Qatar, Pakistan and Saudi Arabia are also involved in mediation. Risks remain. Iran’s Revolutionary Guard is split over foreign involvement in demining and control of shipping lanes, and past agreements have unraveled, escalating into military confrontation. Lower oil eases inflation pressure; rate-hike odds retreat The drop in crude has helped cool inflation worries. The 10-year U.S. Treasury yield fell about 6 basis points to around 4.6%, adding support for risk assets. Wells Fargo noted that while lower oil helps reduce energy price pressure, broader price stickiness suggests inflation is unlikely to normalize quickly. The dollar edged lower while the yen’s rally stalled. CME FedWatch now shows a 57.1% probability of a 25-basis-point hike in September, down from 67.2% the previous day; odds of no change rose to 42.9%. Attention now turns to Friday’s Non-Farm Payrolls report. Strong data could revive hike expectations; weaker data would bolster the case for a hold. JPMorgan said that with oil driving Treasury moves, jobs data is likely to be the key near-term pricing catalyst. AI trade returns, spreading beyond chips AI remained the strongest theme in U.S. equities, with gains broadening beyond the familiar chip-led playbook. Palantir's results reinforced the view that AI applications can translate into revenue growth. Strength across semiconductors, memory and optical communications pointed to sustained compute demand, while Caterpillar signaled that data-center buildouts are beginning to lift traditional industrial equipment demand. The Philadelphia Semiconductor Index vaulted 6.55% for a fourth straight session, with most of its 30 constituents higher. Memory, optical communications, AI software, data-center infrastructure and industrial equipment were all strong. The Nasdaq 100 rose about 3.3%, its biggest one-day gain since May 2025. Mega-cap tech broadly advanced: NVIDIA rose more than 2%; Apple, Microsoft and Tesla gained over 1%; Google climbed 1.11%. Amazon fell more than 2%. Over the past four sessions, the seven largest tech stocks have risen nearly 10%, signaling renewed inflows into large-cap growth. Goldman Sachs Chief Technology Trader Peter Callahan attributed the rally to four factors: risk-off positioning has largely been washed out; technicals have improved; the Nasdaq 100 still trades about 10% below its five-year average valuation; and earnings season has improved confidence in profitability. Goldman's desk also flagged that volume remains 7% below the five-day moving average, suggesting participation is not yet broad and that follow-through will depend on incoming earnings and macro data. Company moves and key developments Palantir surged 29.45%, decisively reclaiming its 200-day moving average. Q2 revenue jumped 93% year over year to $1.935 billion, with U.S. commercial revenue up 149%. CEO Alex Karp called it an "extraordinary" quarter and said demand for AI sovereignty is being unleashed. Other AI software names rose as well: Datadog and Shopify gained more than 5%; ServiceNow and AppLovin climbed over 3%; Adobe and Salesforce added more than 2%. Caterpillar jumped over 5% to a new all-time high. The company posted its first-ever quarter with sales above $20 billion in Q2 (up 24% year over year) and raised full-year guidance across the board. Wells Fargo strategist Ohsung Kwon said Caterpillar is among the most "AI-exposed" traditional stocks, with spillover from data-center construction still in the early stages. The industrial sector is up about 20% this year. SpaceX rose 9.43% but slid nearly 9% after hours on concerns over heavy capital spending. Musk confirmed its AI services will run exclusively on NVIDIA architecture and said the company aims to enter the U.S. telecom market. The broader space complex advanced: Rocket Lab gained nearly 6% after winning a $397 million U.S. Space Force contract, and AST SpaceMobile climbed nearly 11%. A separate post-earnings update showed Q2 revenue of $7.8 billion (up 92% year over year) and a sharp rise in EBITDA, while AI-related capex hit $15.8 billion and is expected to remain elevated in coming quarters. AMD rose 7% in regular trading and fell nearly 8% after hours. CEO Lisa Su said data-center sales are expected to double by 2027 and announced partnerships including with Anthropic. Semiconductors broadly surged: ARM jumped 17.36%, Marvell gained nearly 13%, Intel climbed nearly 11%, Qualcomm rose 7.23%, Broadcom added nearly 7%, and TSMC gained over 2%. TSMC's Q2 revenue came in at $11.54 billion, up 50% year over year and above expectations, though Q3 revenue guidance failed to fully impress. NVIDIA added 2.56%. CEO Jensen Huang announced the open-sourcing and commercial release of Alpamayo 2 Super, an open-source inference model for autonomous driving intended to accelerate applications such as robotaxis, robotics and logistics vehicles. SpaceX also said future AI services will run exclusively on NVIDIA systems, with plans to deploy NVIDIA's Vera Rubin NVL72 rack-scale systems both on Earth and in space. Micron Technology rose 7.62%, returning to the $1 trillion market-cap club. Bank of America reiterated a Buy rating and a $1,550 price target, calling the recent pullback an "excellent buying opportunity" and projecting memory pricing normalization in 2027–2028. Storage names rallied: SanDisk jumped 10.84% after SK Hynix announced the first standard specification for High Bandwidth Flash memory; Rambus rose over 9%, SK Hynix gained over 8%, and Western Digital added over 4%. Intel climbed 10.84%. Media reports said Intel's EMIB-T advanced packaging has made progress, with yields approaching 90% and costs about 50% below TSMC's CoWoS solution. Intel expects to offer the service at scale by 2027 and continues building its large Ohio fab campus, targeting full operation by 2031. Oracle rose 2.74%, but its shares have halved since June and its five-year CDS spread has spiked to a record above the peak seen during the 2008 financial crisis. After aggressively financing AI data-center expansion, debt has reached $129.5 billion. S&P Global cut Oracle's rating to BBB, one notch above junk. Moody's warned leverage could approach 5x. Investors are focused on risk from the mismatch between 15-year leases and shorter-duration AI contracts. Bitdeer was up as much as 23% intraday before ending up 0.09%. The company signed a 16-year data-center hosting and services deal with Norwegian cloud startup Volta Infra to deploy NVIDIA GPUs for leading AI labs. Anthropic is also reported to have reached a $10 billion, six-year compute agreement with Volta. Arista Networks (ANET) rose 3.04% in regular trading and jumped 12.5% after hours on strong AI networking demand. Q2 revenue came in just above $3 billion, up 37.7% year over year. The company raised 2026 guidance for a third time, projecting full-year revenue of $12.6 billion, roughly 40% annual growth. Apple gained nearly 2%. The company is preparing for its September product event, with U.S. retail employees able to apply for on-site roles; the event is expected in the first half of September. Separately, Apple reportedly asked a judge to immediately bar OpenAI from using its trade secrets and to return all confidential information. What to watch next Aug. 5 earnings: Circle, Uber, Eli Lilly, BeiGene and others. Aug. 6 (Thursday) SpaceX lockup expiry: Up to 911.5 million restricted shares are set to unlock. Based on the latest share price, potential value is close to $100 billion, marking the week's largest liquidity stress test. Limited post-unlock selling could support confidence in absorbing high-valued tech assets; concentrated selling could pressure Nasdaq sentiment and Musk-linked trades. 5:00 PM: SanDisk and Western Digital earnings. Reports will shape storage-sector sentiment after recent pullbacks in Micron, SanDisk and SK Hynix. Investors will focus on enterprise SSDs, NAND pricing, AI data-center storage demand, inventory cycles and second-half guidance.