Easing Middle East tensions and strong earnings lift S&P 500 to record

2026-08-05

U.S. stocks rise on easing Middle East tensions

The S&P 500, made up of a broad range of large-cap stocks, closed at a record high for the first time in two months on the U.S. stock market on the 4th. Comments from the U.S. Treasury secretary strengthened views that tensions in the Middle East would ease, while buying on strong earnings also pushed up the market.

The S&P 500 rose 1.8% from the previous day to 7,736, topping the 7,609 reached on June 2. The Dow Jones Industrial Average gained 907 points to 54,085, and the Nasdaq Composite rose 2.6% to 26,584. Front-month WTI crude, the benchmark for U.S. crude futures, briefly fell to the mid-$75s per barrel and was down more than 6% from the previous day.

Buying broadens on earnings

Among individual stocks, data analytics platform Palantir Technologies reported results above market expectations and at one point surged 31%. Construction equipment maker Caterpillar also rose 13%. Semiconductor-related shares that had been under selling pressure, including Micron Technology and Advanced Micro Devices (AMD), also saw buying back.

As of July 31, when about 60% of S&P 500 constituents had reported second-quarter earnings centered on the April-June period, FactSet estimated earnings growth for the quarter at 47% from a year earlier. Even with high expectations, nearly 90% of companies beat market forecasts, it said.

Stock picking widens

After surging 20% from a low in late March to early June, the S&P 500 had been range-bound for a little over two months. However, index-based earnings per share (EPS, on a 12-month forward basis) kept rising, and the latest move higher reflected easing concerns over the Middle East.

From June 2 to August 3, Microsoft led the increase in market capitalization with a gain of about $340 billion, followed by Amazon.com with a gain of about $300 billion. In its latest earnings results, cloud business growth exceeded market expectations, easing concerns about excessive investment in artificial intelligence (AI).

JPMorgan Chase, Berkshire Hathaway and Mastercard were among the financial-related names that also recorded notable gains in market capitalization. Meanwhile, memory semiconductor stocks that led the market in April and May lost momentum, with Nvidia shedding about $390 billion in market value since June 2 and Micron about $260 billion. The Philadelphia Semiconductor Index (SOX), which comprises major chip stocks, is 17% below its June 22 record high. The Nasdaq Composite is also less than 2% below its peak, showing that the recent recovery has extended beyond chip stocks.

Savita Subramanian of Bank of America said there are signs that the market's gains are spreading to a wider range of stocks. Nearly 70% of S&P 500 constituents are above their June 2 closing levels.

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