U.S. equities powered to fresh record highs by midday Tuesday as blowout guidance from Palantir Technologies Inc. (NASDAQ:PLTR) and a Caterpillar Inc. (NYSE:CAT) earnings beat reignited the AI trade, while crude oil tumbled more than 5% on growing conviction that a deal to reopen the Strait of Hormuz is days away.

Treasury Secretary Scott Bessent told CNBC that “we may have an Iran deal tomorrow to open Hormuz.”

• Palantir Technologies stock is among today’s top performers. Why are PLTR shares rallying?

The S&P 500 rose 1.4% to 7,707.81, a record, while the Dow Jones Industrial Average advanced 870 points, or 1.6%, to 54,048.41, also an all-time high. 

The Nasdaq 100 outpaced the tape with a 2.5% jump to 29,502.39. The Russell 2000 climbed 1.5% to 3,027.36.

West Texas Intermediate crude sank 5.3% to $76.06 a barrel, while Brent slid 5.2% to $79.42. 

Rate traders trimmed hawkish bets accordingly. The implied probability of a 25-basis-point Federal Reserve rate hike in September dropped to roughly 57% from about 65% a session earlier, with softer domestic data reinforcing the move: June job openings fell to 7.36 million against a 7.45 million forecast, factory orders unexpectedly declined 0.3% for a second straight month, and the trade deficit narrowed to $73.3 billion.

The retreat in energy costs rippled straight into rates. The 10-year Treasury yield eased five basis points to 4.63%, pulling back from Monday’s 18-month high of 4.75%. The 2-year fell five basis points to 4.20% and the 30-year slipped four basis points to 5.19%.

Tuesday’s Performance In Major U.S. Indices

IndexLast% Change
S&P 5007,707.81+1.4%
Dow Jones54,048.41+1.6%
Nasdaq 10029,502.39+2.5%
Russell 20003,027.36+1.5%
Updated by 12:20 PM ET

According to the Benzinga Pro platform:

  • The iShares Russell 2000 ETF (NYSE:IWM) advanced 1.5%.
  • The Vanguard S&P 500 ETF (NYSE:VOO) gained 1.4%.
  • The SPDR Dow Jones Industrial Average ETF Trust (NYSE:DIA) rose 1.6%.
  • The Invesco QQQ Trust (NASDAQ:QQQ) climbed 2.7%.

Chips Rip While The AI Power Trade Cracks

The Technology Select Sector SPDR Fund (NYSE:XLK) was the runaway leader, up 4.4%, with the Materials Select Sector SPDR Fund (NYSE:XLB) adding 1.4% and the Industrials Select Sector SPDR Fund (NYSE:XLI) rising 1.2%. The Financial Select Sector SPDR Fund (NYSE:XLF) gained 0.9%.

At the other end, the Utilities Select Sector SPDR Fund (NYSE:XLU) and the Energy Select Sector SPDR Fund (NYSE:XLE) each fell 0.9%, the only two sectors down for the session.

At the industry level, the VanEck Semiconductor ETF (NASDAQ:SMH) surged 4.9% and the SPDR S&P Metals & Mining ETF (NYSE:XME) rose 4%, while the iShares Expanded Tech-Software Sector ETF (BATS:IGV) climbed 3.9%. The clear loser was the SPDR S&P Oil & Gas Exploration & Production ETF (NYSE:XOP), down 1.7%.

The semiconductor complex was carried by an optical and memory melt-up. Micron Technology Inc. (NASDAQ:MU) jumped 7.8%, Broadcom Inc. (NASDAQ:AVGO) rose 6.2%, Intel Corp. (NASDAQ:INTC) added 9.6% and Marvell Technology Inc. (NASDAQ:MRVL) gained 12.2%.

Leading the Russell 1000, Wayfair Inc. (NYSE:W) exploded 30.4% higher after second-quarter revenue of $3.52 billion beat the $3.47 billion consensus, adjusted EPS of 95 cents topped the 89-cent estimate. U.S. revenue grew 8.7% and the company had its strongest domestic growth since 2020. Free cash flow of $301 million was also the best since the COVID-19 pandemic era.

Palantir soared 27.4% after Monday’s post-close print showed revenue up 93% to $1.94 billion and U.S. commercial revenue up 149%, alongside the company’s largest-ever guidance raise, lifting full-year revenue guidance by roughly $498 million to about $8.15 billion.

Zebra Technologies Corp. (NASDAQ:ZBRA) rallied 22% on a strong beat: revenue of $1.56 billion versus $1.50 billion expected, adjusted EPS of $6.35, some 45% above consensus, and third-quarter revenue guidance of $1.56 billion at the midpoint, 4.1% ahead of the Street.

Applied Optoelectronics Inc. (NASDAQ:AAOI) extended Monday’s move with a 20.1% gain. The company will report on Thursday.

Gartner Inc. (NYSE:IT) rounded out the top five with a 16.7% jump after adjusted EPS of $4.37 came in 17.1% above consensus on flat revenue of $1.68 billion. Contract value rose 1.7% to $5.3 billion, and management raised full-year adjusted EBITDA, EPS and free cash flow guidance.

Elsewhere in the earnings tape, W.W. Grainger Inc. (NYSE:GWW) fell 5.8% even after posting EPS of $12.01 against $11.23 expected, Cummins Inc. (NYSE:CMI) lost 3.5% on EPS of $6.73 versus $7.26 expected, and TransDigm Group Inc. (NYSE:TDG) slipped 4% despite EPS of $10.87 topping estimates. Energy producers followed crude lower, with Diamondback Energy Inc. (NASDAQ:FANG) down 3.8%.

On the downside, Bruker Corp. (NASDAQ:BRKR) plunged 18.1% in a classic mixed print. Adjusted EPS of 49 cents beat by 27.5%, but revenue of $838.5 million missed and full-year revenue guidance was trimmed to $3.56 billion at the midpoint from $3.59 billion.

Aptiv PLC (NYSE:APTV) sank 17.8% despite beating on the quarter with adjusted EPS of $1.63 against $1.42 expected. The damage came from guidance: third-quarter EPS of $1.25 to $1.35 landed far below the $1.60 consensus, with revenue guidance of $3.12 billion to $3.22 billion also short of the $3.3 billion estimate.

NRG Energy Inc. (NYSE:NRG) tumbled 16.4% after adjusted earnings of $1.49 per share fell short of the $1.69 consensus and declined from $1.73 a year earlier, even as GAAP net income hit $506 million and full-year guidance was reaffirmed.

The read-across hit the rest of the AI-power complex: Vistra Corp. (NYSE:VST) fell 7.3% and Constellation Energy Corp. (NASDAQ:CEG) lost 3.0%.

Sterling Infrastructure Inc. (NASDAQ:STRL) dropped 11.7% on a margin-mix problem: revenue rose 90% to $1.17 billion and the revenue guidance midpoint was lifted 8.7%, but the adjusted EBITDA midpoint went up only 5.3%.

UL Solutions Inc. (NYSE:ULS) slid 11.6%. The company’s revenue of $816 million was in line and adjusted EPS of 59 cents beat the 56-cent estimate. No guidance cut was disclosed, and the scale of the sell-off is not explained by the numbers themselves, pointing to a de-rating on in-line organic growth rather than a specific catalyst.

Elsewhere in the earnings tape, W.W. Grainger Inc. (NYSE:GWW) fell 5.8% even after posting EPS of $12.01 against $11.23 expected, Cummins Inc. (NYSE:CMI) lost 3.5% on EPS of $6.73 versus $7.26 expected, and TransDigm Group Inc. (NYSE:TDG) slipped 4.0% despite EPS of $10.87 topping estimates. Energy producers followed crude lower, with Diamondback Energy Inc. (NASDAQ:FANG) down 3.8%.

Tuesday’s Russell 1000 Top Gainers

Name% change
Wayfair Inc.+30.39%
Palantir Technologies Inc.+27.40%
Zebra Technologies Corporation+22.03%
Applied Optoelectronics, Inc.+20.05%
Gartner, Inc.+16.71%

Tuesday’s Russell 1000 Top Losers

Name% change
Bruker Corporation-18.05%
Aptiv PLC-17.84%
NRG Energy, Inc.-16.37%
Sterling Infrastructure, Inc.-11.67%
UL Solutions Inc.-11.64%