The AI boom fuels Wall Street gains
Palantir Technologies led the way as the Nasdaq composite surged 2.6%. Its shares rose 29.5% following the revelation from its CEO, Alex Karp. Karp said company revenue had grown by 93% during the quarter. He described this as an 'otherworldly' performance. The AI software firm also increased its revenue forecast for the full year of 2026. It indicated strong and sustained demand for its tools.
Caterpillar Inc. gained 5.6% in the market. It marked its first-ever quarterly revenue surpassing $20bn. Caterpillar CEO Joe Creed highlighted the order rates. The company's various business segments are robust. The firm is seeing increased orders for turbines. These are used in powering datacenters. This is especially significant due to the ongoing AI boom. The infrastructure requirements for supporting it are also important.
Oil retreat eases inflation fears
Brent crude, an international standard for oil, saw prices fall 5.3%. The price dropped to $79.36 per barrel. This decline is a relief for energy-dependent economies. The market had experienced significant swings between $72 and $102 in July. These swings were driven by fears around war in the Gulf. As the situation stabilizes and the outlook becomes more optimistic, the drop in oil prices has helped lower borrowing costs. Both companies and consumers benefit from this.
The yield on the 10-year Treasury fell to 4.62% after reaching 4.75% the previous week. Although it remains above the pre-Iran war level of 3.97%, the decline is a positive development for large-scale projects, such as the construction of AI datacenters. Lower yields mean reduced borrowing costs, which can benefit both businesses and individuals.
Chipmakers and a misstep at Chipotle
Computer chip manufacturers experienced strong gains. Companies like Nvidia, Broadcom, and Micron Technology rose by 2.6% to 7.6%. These increases were among the primary factors. They drove the upward movement of the S&P 500. However, the restaurant chain Chipotle Mexican Group suffered a 9.7% decline in its stock. It removed jalapeños from certain menus in response to a salmonella outbreak. Minnesota health authorities have confirmed no ongoing issues.
At the close of the trading day, the S&P 500 reached a record high of 7,736.52, the Dow Jones industrial average hit 54,085.88, and the Nasdaq composite climbed to 26,584.99. These record levels are occurring as the S&P 500 is on track to deliver earnings growth of nearly 50% year-over-year, according to data from FactSet. This potential jump in earnings would be the largest increase since 2021, a year marked by a rapid economic rebound following the pandemic.