Dow jumps over 700 points, S&P 500 hits record high on earnings, Hormuz deal hopes

US stocks rallied at the open on Tuesday, August 4, with the S&P 500 and Dow Jones Industrial Average climbing to fresh record highs as upbeat corporate earnings and optimism over a potential US-Iran agreement to reopen the Strait of Hormuz boosted investor sentiment.

The S&P 500 rose around 0.9% to an all-time intraday high, while the Nasdaq Composite gained 1%. The Dow Jones Industrial Average advanced more than 700 points, or about 1.4%, setting a new record, led by sharp gains in Caterpillar and other industrial stocks.

Investor sentiment improved after US Treasury Secretary Scott Bessent said Washington was engaged in talks with Iran and that a deal to reopen the Strait of Hormuz could come "today or tomorrow." His comments pushed oil prices sharply lower, with US West Texas Intermediate crude falling about 5% to around $76 a barrel and Brent crude dropping roughly 4% to near $80, easing concerns over energy supply disruptions.

Corporate earnings also underpinned the rally. Palantir Technologies surged more than 20% after reporting stronger-than-expected quarterly results, while Caterpillar climbed about 10%-12% after quarterly sales exceeded $20 billion for the first time. Investors are also awaiting earnings from several major companies later in the session, keeping the focus firmly on the earnings season.

Dow, S&P 500, Nasdaq futures edge higher; Palantir, Caterpillar lead advances

US stock futures traded modestly higher on Tuesday, August 4, with technology shares leading gains as investors assessed a fresh batch of corporate earnings while continuing to monitor uncertainty surrounding developments in West Asia.

Nasdaq-100 futures rose about 0.9%, buoyed by a more than 16% jump in Palantir Technologies in premarket trading after the data analytics company reported stronger-than-expected second-quarter results. Other semiconductor and AI-linked stocks also advanced, with Micron Technology gaining around 3% and Marvell Technology rising about 7%.

S&P 500 futures edged up 0.2%, while Dow Jones Industrial Average futures added about 0.7%, supported by a 6% gain in Caterpillar after the industrial equipment maker posted better-than-expected quarterly earnings.

The gains followed a strong session on Monday, when the Dow closed at a record high as easing oil prices lifted investor sentiment. Technology stocks remained in focus after Amazon's market capitalisation crossed the $3 trillion mark, underscoring continued optimism around artificial intelligence despite elevated capital spending.

Investors are now awaiting another busy day of earnings, with Advanced Micro Devices (AMD), McDonald's, Spotify and Caterpillar among companies reporting. Markets are also focused on SpaceX's first quarterly earnings report since its June public listing, after the stock came under pressure following its market debut.

Meanwhile, geopolitical developments remained on investors' radar. Markets continued to digest mixed signals over US-Iran negotiations after President Donald Trump said he had called off a planned large-scale attack on Iran to allow diplomacy to resume.

Tehran denied that direct talks were underway, prompting Trump to accuse Iran of being "unbelievably duplicitous" and warn that it faced a final opportunity to reach an agreement. Oil prices traded higher as investors weighed the uncertain outlook.

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