US Stock Market: Wall Street surged toward fresh record highs on Tuesday, buoyed by another wave of stronger-than-expected corporate earnings and easing oil prices, which helped calm inflation concerns and boosted investor sentiment.
The S&P 500 climbed 1.7%, putting it on course to surpass the record high it set a couple of months ago. The Dow Jones Industrial Average gained 966 points, or 1.8%, after closing at a record in the previous session, while the Nasdaq Composite advanced 2.2% as of 12:55 p.m. Eastern Time.
Corporate earnings power market rally
Despite persistent concerns over elevated inflation, the conflict involving Iran and fears of an artificial intelligence-driven stock market bubble, Wall Street’s latest rally has been underpinned by robust corporate earnings.
Caterpillar rose 6.5% after reporting quarterly profit and revenue that exceeded analysts’ expectations. The construction equipment maker crossed $20 billion in quarterly sales for the first time, with CEO Joe Creed citing strong order growth and an expanding backlog. The company is also benefiting from rising demand for turbines used to power AI data centres.
McDonald’s gained 0.9% after reporting quarterly profit above market estimates despite consumers facing higher fuel costs and economic uncertainty.
The latest results add to a strong earnings season led by companies including Amazon and Microsoft. According to FactSet, companies in the S&P 500 were on track to deliver nearly 50% year-on-year growth in earnings per share for the spring quarter, the strongest expansion since the post-pandemic recovery in 2021.
Oil prices fall, easing inflation concerns
Another key driver of Tuesday’s rally was the decline in crude oil prices.
Brent crude, the international benchmark, fell 4.9% to $79.64 per barrel as optimism returned to the oil market following reports that the conflict involving Iran may allow oil tankers to resume smoother movement through the Persian Gulf.
Oil prices had swung sharply between $72 and $102 per barrel throughout July amid uncertainty over regional shipping disruptions. The latest decline helped ease concerns that higher energy costs could reignite inflation.
Cooling oil prices also pushed bond yields lower.
The yield on the 10-year US Treasury fell to 4.63% from 4.70% on Monday and 4.75% at the end of last week. Although still above pre-conflict levels, lower yields reduce borrowing costs for households and businesses while supporting equity valuations.
US economy remains resilient
Fresh economic data indicated the US labour market remained resilient.
US employers advertised nearly 7.4 million job openings at the end of June, slightly below May’s level but broadly in line with economists’ expectations, suggesting the economy continues to hold up despite lingering inflation pressures.
Asian and European markets advance
Stock markets across Europe and Asia also posted gains.
South Korea’s Kospi climbed 1.6% after experiencing sharp volatility in recent sessions, driven largely by AI-linked heavyweights Samsung Electronics and SK Hynix. The index had fallen 5.1% before rebounding 17.9% over the previous two trading days.
On Wall Street, semiconductor stocks also extended gains, with Broadcom rising 6.1%, Nvidia adding 1.9%, and Micron Technology advancing 8%, providing additional support to the broader market.
