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Interior view of the New York Stock Exchange (NYSE), photographed on July 29 (local time). / AFP-Yonhap

Hopes for progress in negotiations to reopen the Strait of Hormuz and strong earnings from AI-related companies drove the Dow and S&P 500 to record highs on Wall Street on the 4th (local time).

Brent crude fell 5.3%, dropping below $80 per barrel for the first time in three weeks. U.S. Treasury yields and the probability of a September rate hike also declined.

Dow, S&P 500 hit record highs on Hormuz deal hopes, strong AI earnings

The Dow Jones Industrial Average closed at 54,085.88, up 907.47 points (1.71%) from the previous session. The S&P 500 rose 136.02 points (1.79%) to 7,736.52. The tech-heavy Nasdaq Composite gained 671.10 points (2.59%) to close at 26,584.99. Both the Dow and S&P 500 set new closing record highs. The Nasdaq 100 also rose 3.3%.

Buying was driven by hopes that normalized vessel traffic through the Strait of Hormuz could increase oil supply and ease short-term energy price pressure. The New York Times reported that Europe's Stoxx 600 rose 0.7%, Japan's Nikkei 225 rose 0.3%, and South Korea's Kospi rose 1.6%.

Palantir surges 29.45%, Caterpillar jumps 5.60% — driving 300 points of Dow gains

Alongside Hormuz negotiation hopes, strong earnings from AI-linked companies also fueled the rally. Palantir surged 29.45% to close at $162.66 after raising its full-year revenue outlook, its biggest single-day gain since February 2024.

Caterpillar raised its full-year revenue growth forecast, citing demand for power generation and construction equipment for AI data centers. Its shares rose 5.60% to $876.54, accounting for more than 300 points of the Dow's gain. The Philadelphia Semiconductor Index rose about 7%, its fourth straight day of gains.

Of the 304 S&P 500 companies that have reported earnings so far, 85.2% beat market expectations, well above the long-term average of 67.5%, Reuters reported, citing London Stock Exchange Group (LSEG) data.

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Vessels sail through the Strait of Hormuz off Musandam, Oman, on the 3rd (local time). / Reuters-Yonhap

Oil falls below $80 on Bessent remarks, September rate hike odds drop

Global oil prices fell sharply after U.S. Treasury Secretary Scott Bessent said in a CNBC interview that day that an agreement to reopen the Strait of Hormuz could come within a day or two. October-delivery Brent crude closed at $79.36 per barrel, down 5.3%. September-delivery U.S. West Texas Intermediate (WTI) crude fell 5.7% to $75.77 per barrel.

Tony Miano of Wells Fargo Investment Institute said the strait's reopening could normalize oil supply and ease short-term energy price pressure, adding that while lower oil prices could ease inflation concerns, other prices may not stabilize as quickly.

With oil prices falling, the market-implied probability of a Federal Reserve rate hike in September dropped to 56.9% from 67.2% the previous day. The 10-year U.S. Treasury yield fell 0.064 percentage points to 4.615%.

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Elon Musk, Tesla CEO and founder, CEO, chairman, and chief engineer of SpaceX, speaks via video at the Nasdaq MarketSite in New York, U.S., on June 12 (local time), the day of SpaceX's initial public offering (IPO). / Reuters-Yonhap

SpaceX posts $7.8bn revenue in first public earnings — shares fall 7% after hours

The U.S. Labor Department's June job openings figures declined, but hiring rose slightly and layoffs remained low. Reuters characterized labor demand as relatively stable.

Bret Kenwell, an analyst at eToro, said a strong jobs report on the 7th could bolster the case for a September rate hike, while weak hiring data would give the Fed more room to hold rates steady.

After the market closed, SpaceX released its first quarterly earnings since going public. Second-quarter revenue came in at $7.8 billion, above the market forecast of $6.93 billion, marking growth of more than 90% from $4.1 billion in the same period last year. Operating loss was $143 million, and net loss was $541 million. Despite revenue beating expectations, SpaceX shares fell about 7% in after-hours trading.

                                                                                                               Ha Man-ju