US equities opened sharply higher on Tuesday, with the Dow Jones Industrial Average climbing roughly 694 points, or 1.31%, as robust earnings from Palantir Technologies and Caterpillar reinforced confidence in artificial intelligence-driven capital spending. The S&P 500 advanced 0.57%, while the Nasdaq Composite gained 1.05%, extending a rebound that began last week after major tech names reported strong results.
Oil prices retreated as Treasury Secretary Scott Bessent indicated that talks with Iran were ongoing and that an agreement to reopen the Strait of Hormuz could be reached as soon as Tuesday or Wednesday. West Texas Intermediate crude fell about 4% to near $76 per barrel, while Brent crude declined roughly 4% to around $80 per barrel, easing a key inflationary pressure.
Palantir and Caterpillar lead the charge
Palantir Technologies surged more than 20% in early trading after raising its full-year revenue forecast following better-than-expected second-quarter results. CEO Alex Karp described the quarter as "otherworldly," with commercial revenue jumping 149% year over year to $764 million, driven by growing demand for sovereign AI solutions. The company's strong performance underscores the accelerating adoption of AI platforms across both government and enterprise sectors.
Caterpillar also rallied about 10% after reporting better-than-expected second-quarter earnings and lifting its annual revenue growth guidance. The industrial equipment maker cited robust demand for its machinery, supported by continued investment in AI data centers, which has increased the need for power-generation and construction equipment. The company also said full-year tariff costs are expected to come in at the lower end of its previous guidance, providing additional relief to investors.
These results add to the growing optimism surrounding AI-related spending, following strong earnings from Microsoft and Amazon last week that helped stabilize market sentiment after a volatile July. As noted in our earlier coverage of Palantir's earnings reigniting the AI rally, the market's focus remains on companies with direct exposure to AI infrastructure.
AI-linked stocks extend gains
The positive earnings reports lifted several technology and semiconductor stocks. Micron Technology gained about 5%, while Marvell Technology rose roughly 12%. Nvidia advanced 2% as investors continued to favor companies positioned to benefit from AI infrastructure spending. Optical networking firms Coherent and Lumentum climbed around 13% and 5%, respectively, after reports that the Trump administration is drafting a ban on US imports of new models of Chinese data center components.
Elsewhere, Snap rose 10% after reporting second-quarter revenue above Wall Street expectations, helped by stronger advertising spending during the FIFA World Cup and increased campaign activity from large North American advertisers. SpaceX shares also edged 4% higher ahead of the company's first earnings report since its public market debut, scheduled after Tuesday's closing bell.
Investors await key economic data
Attention later in the session will turn to a series of US economic reports that could shape expectations for monetary policy. The Labor Department's Job Openings and Labor Turnover Survey is expected to show approximately 7.4 million job openings in June, down from 7.6 million in May. Investors will also monitor June factory orders, international trade data, and comments from Kansas City Federal Reserve President Jeffrey Schmid for additional insight into the health of the US economy.
The data come as markets continue to assess the Federal Reserve's next move on interest rates alongside developments in the Middle East. According to the CME FedWatch Tool, traders currently see a 63.4% probability that the central bank will raise interest rates by at least 25 basis points at its next meeting. This backdrop of strong earnings and easing geopolitical tensions has helped lift market sentiment, though the path forward remains data-dependent.
This article is for informational purposes only and does not constitute financial advice.
