S&P 500 Breaks Records on AI-Driven Earnings and Geopolitical Optimism

The S&P 500 closed at a record high of 7,736.52 on Tuesday, marking a gain of 1.79% and surpassing previous highs.

The rally was fueled by strong earnings from artificial intelligence-linked companies, including Palantir Technologies and Caterpillar, which surged 29.5% and 5.6%, respectively.

Of the 304 S&P 500 companies that reported second-quarter earnings as of Friday, 85.2% beat estimates, with every major sector showing profit growth.

The Philadelphia Semiconductor Index shot up 6.6% as semiconductor stocks continued to benefit from AI infrastructure spending.

Treasury Secretary Scott Bessent's comments on a potential diplomatic resolution to the Iran conflict also contributed to the rally, with crude oil prices dropping about 5% and reducing Fed rate-hike odds for September to 56.9%.

However, Jack Ablin, chief investment strategist at Cresset Capital Management, cautioned against reading too much into the move, stating that he doesn't sense any skepticism among investors.