Two days ago the Dow was at 52,486. Tonight it closed at 54,086. That's 1,600 points in two sessions. The S&P hit an all-time high for the first time since June — crossing 7,700 and closing at 7,736. The Dow posted back-to-back record closes for the first time since the blockade began. The Nasdaq surged 2.6%. Treasury Secretary Bessent went on CNBC this morning and said the U.S. is "in talks with the Iranians" and a deal to reopen the Strait of Hormuz could come "today or tomorrow." Oil fell 5%. Palantir surged 29% after its revenue nearly doubled to $1.93 billion. Caterpillar hit $20 billion in quarterly revenue for the first time in its 98-year history — because AI data centers need tractors, generators, and concrete. The AI trade didn't just come back. It brought the old economy with it.
Records everywhere. The S&P gained 1.79% to close at 7,736 — an all-time high, its first since June 2. The Nasdaq jumped 2.59% to 26,585. The Dow surged 907 points to 54,086 — its second consecutive record close, led by a 6% jump in Caterpillar that sent the industrial giant past its previous intraday high. Tech gained 4%. Industrials and materials each rose 2%. Financials added 0.9%. The only sector in the red was energy — down on the falling oil that's fueling the rally everywhere else.
| The Numbers I Circled | At the close, August 4 · Day change |
|
| S&P 500 | 7,736.52 | ATH +1.79% |
| Nasdaq | 26,584.99 | +2.59% |
| Dow Jones | 54,085.88 | ATH +907 pts |
| S&P 500 Sectors | Day change |
|
| Info. Technology | | +4.0% |
| Consumer Disc. | | +2.5% |
| Industrials | | +2.0% |
| Materials | | +2.0% |
| Comm. Services | | +1.5% |
| Financials | | +0.9% |
| Health Care | | +0.6% |
| Utilities | | +0.5% |
| Consumer Staples | | +0.4% |
| Real Estate | | +0.3% |
| Energy | | −2.5% |
| | Notable Gainers | Day change |
|
| |
| |
| |
| |
| |
Palantir was the headline. The AI software company's revenue nearly doubled to $1.93 billion, powered by a 150% surge in U.S. commercial revenue. It raised its full-year outlook for the third time this year. The stock gained 29%. This isn't a chip company. Palantir doesn't make hardware. It makes the software that turns AI infrastructure into actionable intelligence for governments and enterprises. Revenue doubling is the proof that the AI spending Microsoft and Amazon validated last week is flowing downstream into the companies that build applications on top of the infrastructure.
Caterpillar told the same story from the opposite end. The company posted $20 billion in quarterly revenue for the first time ever and raised its annual growth forecast. The reason: AI data centers. Google, Microsoft, Amazon, and Meta are building facilities so fast that they need Caterpillar's construction equipment to dig the foundations and Caterpillar's power generators to run the servers. A yellow tractor company just had its biggest quarter because of artificial intelligence. That's how far the AI economy has spread.
Bessent's comments moved oil. The Treasury Secretary told CNBC's "Squawk Box" that the U.S. and Iran are talking, and a deal to reopen the Strait of Hormuz with freedom of commercial movement could arrive by Wednesday. Oil fell 5% on the statement. The Strait has been functionally closed since early July. If it reopens — even partially — the oil premium that drove Brent from $76 to $100 starts to deflate, and the July inflation scare that pushed the 30-year to 5.26% loses its catalyst.
SpaceX reports its first quarterly earnings as a public company after the close tonight. AMD also reports — the first pure-play AI chip company to deliver results since the July correction.
What The Market Is Pricing In
Caterpillar hitting $20 billion in revenue because of AI data centers is the moment the trade stopped being a technology story and became an economic cycle. When Nvidia sells a chip, that chip goes into a server. The server goes into a data center. The data center needs a building. The building needs a foundation. The foundation needs a backhoe. The backhoe is made by Caterpillar. On Wall Street they call this the multiplier effect — when one dollar of spending in one sector creates three or four dollars of activity across the economy. Nvidia's dollar became Microsoft's server rack, became Caterpillar's backhoe, became 3M's industrial tape, became Sherwin-Williams' paint on the data-center wall. That chain is why the Dow — which has Caterpillar but not Nvidia — hit a record alongside the Nasdaq. The AI boom stopped being a tech trade and became a cycle that reaches the steel, the concrete, and the diesel.
Eighty-five percent of the 304 S&P 500 companies that have reported beat earnings estimates — against a long-term average of 67.5%. That's the best beat rate in years. And the companies beating aren't just tech names. They're banks. Homebuilders. Paint companies. Automakers. Equipment manufacturers. The AI spending is real. The non-AI economy is absorbing it and growing.
The S&P and Dow both hit all-time highs on the same day Caterpillar posted its biggest quarter in 98 years on AI data-center demand, and the market is telling you the AI trade has become an economic multiplier — every dollar spent on chips creates dollars of revenue for construction, power, and materials, which means the cycle is broader, deeper, and more durable than the tech-only story the market was selling in July. Palantir's revenue doubling confirms the software layer is monetizing. Caterpillar's record confirms the physical layer is building. Bessent's deal talks confirm the geopolitical risk that repriced everything in July is shrinking. Three pillars of the rally — AI revenue, industrial demand, and de-escalation — all arrived on the same Tuesday.
The railroad boom of the 1850s didn't just enrich the railroad companies. It created the steel industry, the telegraph industry, and built the towns at every junction. The technology was the catalyst. The ecosystem was the economy. AI is doing the same thing in 2026. Nvidia is the railroad. Caterpillar is the steel. Palantir is the telegraph. The data centers are the new junctions. And the Dow just hit 54,000 because the ecosystem is bigger than any single company.
Three things I'm watching tonight and the rest of this week:
01 — SpaceX first quarterly report tonight after the close
The most anticipated debut earnings since Rivian. SpaceX went public through a direct listing in June and was added to the Nasdaq-100 in July. The market expects revenue above $5 billion from Starlink, government launches, and defense contracts. The question isn't whether SpaceX makes money — it's whether the margins justify the valuation. If Musk delivers clean revenue growth and positive free cash flow, the stock becomes an institutional anchor. If the numbers disappoint or the capex scares the market, the "beat and sell" pattern from late July could resurface.
02 — AMD earnings tonight after the close
The first pure-play AI chip company to report since the July correction. AMD's data-center GPU business has been growing 100%+ year over year. The market needs to see that growth continuing and that Nvidia's dominance isn't capping AMD's share. If AMD beats and guides above on AI accelerators, the SOX — which rallied 4% today — extends the recovery and the bear-market label from July gets erased. If AMD misses, the chip correction isn't over and the SOX rally was a dead-cat bounce.
03 — Does the Strait deal materialize by Wednesday?
Bessent said "today or tomorrow." That means the market wakes up Wednesday either with a deal headline or without one. If the Strait reopens with freedom of commercial movement, oil falls to $75 and the July inflation scare is officially over — the Fed holds through September, the 30-year eases, and the rally has months of runway. If the talks stall — as they have before — oil bounces back above $85 and the market gives back part of this week's 1,600-point Dow surge. The deal is priced in. Failure to deliver is the risk.
Two record closes in two days. Palantir revenue doubled. Caterpillar hit $20 billion. Bessent said the words "deal today or tomorrow." The S&P is at an all-time high. The Dow is at an all-time high. And tonight SpaceX and AMD tell you whether the momentum holds or whether the market got ahead of itself again.
That's it for today. See you tomorrow after the close.
— Tom Hartley
Today In Perspective · Published daily, Monday–Friday, after the close
This newsletter is for informational purposes only and does not constitute investment advice. The author is not a registered investment advisor. Past performance does not guarantee future results. Consult a qualified financial professional before making investment decisions.
