The melt-up found another gear. A day after the Dow first hit a record, it did something it had never done before: close above 54,000. The S&P 500 hit its own record, its first in two months, and the Nasdaq jumped 2.6%, powered by a stunning 29% surge in Palantir and a double-digit pop in Caterpillar. But the real engine was quieter and more important: growing confidence that a deal to reopen the Strait of Hormuz is close, which is collapsing oil prices and, with them, the market's fear of Fed rate hikes.
Market snapshot
| Instrument | Level | Move |
|---|---|---|
| US equities (Tue Aug 4 close) | ||
| Dow Jones | 54,085.88 | +1.71% · first above 54k |
| S&P 500 | 7,736.52 | +1.79% · record |
| Nasdaq Composite | 26,584.99 | +2.59% |
| Earnings movers | ||
| Palantir | revenue +93% | ≈ +29% |
| Caterpillar | record $20B quarter | +9 to 10% |
| Also reporting | AMD, McDonald's, Pfizer | mixed |
| Rates, commodities & FX | ||
| Sept hike odds | ≈ 57% | from 67% |
| Brent Crude | toward $80 | −10%+ on the week |
| Gold (XAU/USD) | ≈ $4,138 | +1.48% |
| USD/JPY | 157.41 | yen holds gains |
Index closes are for the Tuesday 4 August session. Oil has fallen more than 10% on the week; the figure shown is approximate for the session. Single-stock moves are approximate. Commodity and FX levels are verified on live price pages. Always check live prices with your broker.
Palantir and Caterpillar lead the charge
The rally had two very different faces, and together they tell you how broad this move has become. Palantir rocketed about 29%, one of its best days on record, after reporting revenue up 93% from a year earlier and raising its guidance, a blowout that cemented it as a marquee winner of the AI boom. At the other end of the spectrum sat Caterpillar, up 9 to 10%, an old-economy industrial giant that posted its first-ever $20 billion quarter as its power and energy division rode the AI data-centre build-out. Caterpillar alone contributed roughly a third of the Dow's entire gain. Software and heavy machinery leading the same rally is the sign of an AI trade that has spread far beyond a handful of chip names.
Live Palantir chart (last three months). Prices shown are current, not the session covered above.
The real fuel: a Hormuz deal cools rate fears
Beneath the earnings fireworks, the more durable story was geopolitical. Optimism grew that an interim deal to reopen the Strait of Hormuz is within reach, with Qatar floating a proposal and Iran reportedly weighing letting European teams clear mines from the strait. The market has been chasing this thread for a week, and it keeps paying off. Oil is in freefall: Brent has fallen more than 10% on the week toward $80 as the war premium unwinds. And here is why that matters far beyond energy: cheaper oil means less inflation, which means less pressure on the Fed, so the odds of a September rate hike fell to about 57%, down from 67% just days ago. The whole chain that drove markets down in late July, war, oil, inflation, rate fear, is now running in reverse and lifting everything.
Gold climbs, the yen holds its gains
Even risk-loving days leave clues elsewhere, and this one did. Gold climbed about 1.5% back above $4,100, toward $4,138, which is notable on a day stocks were flying: the same falling-rate-hike expectations that lifted equities also make non-yielding gold more attractive, and Chinese buyers kept adding to holdings. In currencies, the Japanese yen held onto its recent sharp rally, with USD/JPY steady near 157 after sliding from 163 the week before. The dollar was broadly soft, keeping the euro firm around 1.1515.
What it means for traders
This is a powerful, broad rally with a genuine fundamental driver behind it, not just momentum. As the Iran war premium drains out of oil, it is pulling inflation fear and rate-hike bets down with it, which is a green light for almost every risk asset at once, and that is why records are falling day after day. But two cautions are worth holding. First, this now rests heavily on the Hormuz deal actually being signed; if the talks stall or collapse, oil and rate fear would snap straight back. Second, the melt-up runs directly into Friday's jobs report, and even with hike odds cooling to 57%, a hot number could revive the very fear this rally has shed. Watch the Iran headlines and the jobs print. When a market is this euphoric, the discipline that protects you is the boring kind: keep risk small per trade, size every position deliberately, and if you trade real size, know how the professionals manage risk into event weeks. You can read how the run began in yesterday's wrap.
This market wrap is for information and education only and is not financial advice, a forecast, or a recommendation to buy or sell any instrument. Prices, yields and percentage moves are approximate, sourced from public price pages and reports, and may be delayed or revised; single-stock moves cited are for context. Trading forex, CFDs and leveraged products carries a high level of risk and may not be suitable for all investors; you can lose more than your deposit. Always do your own research.