S&P 500 Tops 7,700 as Hormuz Deal Hopes Fuel Global Rally

The S&P 500 closed above 7,700 for the first time, rising 1.8 percent, as US-Iran Hormuz reopening hopes drove oil down 5 percent and lifted global equities.

"Recent market volatility resembles flight turbulence rather than a crash," said Steve Chiavarone, deputy chief investment officer of equities at Federated Hermes. "The bull market retains room for growth."

The Dow Jones Industrial Average gained 1,036.66 points, or 1.95 percent, to close at 54,215.07, its second straight record, while the Nasdaq Composite advanced 2.58 percent and the Russell 2000 added 1.85 percent. Semiconductors led sector gains, climbing 6.2 percent, with Applied Optoelectronics up 21.4 percent and POET Technologies up 15.6 percent. Computer peripherals followed, adding 5.1 percent. Hospital and medical practitioners fell 2.9 percent, and oil and gas exploration and production slipped 1.5 percent. Palantir Technologies jumped 29.45 percent to $162.66, adding almost $88.8 billion in market value after second-quarter revenue rose 93 percent to $1.935 billion. Caterpillar gained 5.6 percent after quarterly sales topped $20 billion, powered by AI-driven turbine demand. About 85.2 percent of S&P 500 companies beat earnings estimates, above the historical norm.

The oil slide, with Brent falling 5.3 percent to $79.36 a barrel and WTI down 5.69 percent to $75.64, eased inflation concerns and cut the odds of a Federal Reserve rate increase to 57 percent. Treasury Secretary Scott Bessent said a deal with Iran could reopen the strait within two days, though Tehran has disputed direct negotiations.

Hormuz Diplomacy Reshapes the Energy Complex

The diplomatic push, with Oman serving as intermediary and Pakistan facilitating, would restore commercial shipping through the corridor that carries about 20 percent of global petroleum liquids. Iran would undertake mine clearance while the US lifts its naval blockade, with a reported 60-day toll-free transit window. The dollar index slipped 0.03 percent, while gold advanced 1.52 percent and silver jumped 4.13 percent as the 10-year Treasury yield retreated. JetBlue climbed 5.9 percent to a 52-week high of $6.62 on the fuel-cost relief, while crude's slide pressured energy producers.

Earnings Momentum Carries the Tape

Palantir's 93 percent revenue surge and raised 2026 outlook, lifting its forecast by $498 million, anchored the AI trade, while Caterpillar's $20.54 billion quarter showed the spending wave reaching industrials. SpaceX posted $7.8 billion in revenue, up 92 percent, though shares slipped after hours on $15.8 billion in capital expenditures tied to AI investments at xAI. AMD reached record revenue of $11.5 billion with data center sales up 107 percent to $6.7 billion, but shares fell 8 percent after hours on profit taking. Booking Holdings gained 6 percent after hours on an earnings beat, while Pinterest dropped 9.1 percent on softer third-quarter guidance.

Investors now turn to Disney's fiscal third-quarter results Wednesday and Nvidia's Aug. 26 report. The Nikkei jumped 2.3 percent overnight, and ASX futures added 0.4 percent, extending the global advance.

This article is for informational purposes only and does not constitute investment advice.