U.S. stocks closed higher on Tuesday, with the Dow Jones Industrial Average and the S&P 500 both reaching new all-time highs, as reported at 4:00 PM Beijing time on August 5th. The Dow broke through the 54,000-point mark for the first time in history, while the S&P 500 surpassed the 7,700-point level for the first time.
Strong quarterly earnings from companies like Caterpillar Inc and Palantir Technologies boosted investor sentiment. U.S. Treasury Secretary Scott Bessent indicated that a peace agreement between the United States and Iran could be reached, leading to a sharp decline in oil prices. The Dow Jones Industrial Average rose 907.47 points, or 1.71%, to close at 54,085.88. The Nasdaq Composite Index added 671.10 points, or 2.59%, to finish at 26,584.99. The S&P 500 Index gained 136.01 points, or 1.79%, to end the session at 7,736.51.
Oil prices moved significantly lower on Tuesday following comments from U.S. Treasury Secretary Scott Bessent, who stated that a deal between the United States and Iran could be finalized on Tuesday or Wednesday to reopen the Strait of Hormuz. In an interview, Bessent said, "We are negotiating with the Iranian side." He then added, "It is possible that we will reach an agreement today or tomorrow to open the strait and move toward a more normalized situation in this conflict." Additionally, a Qatari official's mention of a potential short-term agreement between the U.S. and Iran also contributed to the sharp decline in international oil prices. Reports from Qatar indicated that the country's Foreign Ministry spokesperson, Majed al-Ansari, stated that negotiations between the U.S. and Iran "are ongoing," with a focus on de-escalation and reopening the Strait of Hormuz. However, the spokesperson noted that direct talks between the two parties were not currently taking place.
Caterpillar Inc reported better-than-expected second-quarter results and raised its revenue growth guidance, citing strong demand. Palantir Technologies also posted robust second-quarter earnings. Other tech stocks followed Palantir’s lead, with Micron Technology rising 4% and Marvell Technology gaining 8%. Jose Torres, senior economist at Interactive Brokers, commented, "Market sentiment was high at the start of the month." He noted that the latest manufacturing and services data from Monday, along with "recent earnings calls, have reinforced confidence that the outlook for capital returns could be impressive, following the significant valuation declines caused by the previous deep sell-off in tech stocks."
On the economic data front, the U.S. trade deficit narrowed in June as imports fell for the first time since the start of the year, with the decline being broad-based. Data released by the U.S. Commerce Department on Tuesday showed that the goods and services trade deficit shrank by 5.6% from the previous month to $73.3 billion. Imports fell 1.8%, while exports decreased 0.9%. This trade data marked the end of the second quarter, indicating that net exports continued to be a drag on U.S. economic growth. U.S. trade data has been volatile in recent months, influenced by fluctuating tariff policies, disruptions from the Middle East conflict, and the boom in artificial intelligence investment. Although the U.S. Supreme Court overturned several import tariff measures in the first quarter, the Trump administration continues to seek other avenues to impose tariffs on imported goods. Driven by massive corporate investment in artificial intelligence, U.S. imports of computers, computer peripherals, and components surged in 2025 and early this year. However, the latest trade report showed a slowdown in the pace of computer and semiconductor imports in June. Imports of capital goods, which include these products, fell for the first time since September. After adjusting for inflation, the U.S. goods trade deficit narrowed to $94.5 billion in June.
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