U.S. stocks finished Tuesday, August 4, at new heights. The S&P 500 climbed 1.8% to a record close, the Dow Jones Industrial Average rose 1.7% for a second straight record and the Nasdaq Composite jumped 2.6%, according to an updated Associated Press market report.

The rally had two clear supports: another round of stronger-than-expected corporate results and a sharp decline in oil. That combination eased some of the market's two biggest recent worries—whether artificial-intelligence spending can keep producing profits and whether expensive energy will keep inflation and borrowing costs high.

The numbers

Palantir was up roughly 30% late in the session after reporting that second-quarter revenue grew 93% from a year earlier and raising its full-year outlook. Caterpillar gained about 6.6% after posting its first quarter with more than $20 billion in sales and revenue; the company said demand was strong across its businesses, including turbines used to power data centers.

Chipmakers reinforced the technology rally. Broadcom rose about 7.5%, Micron Technology gained about 8.1% and Nvidia added about 2.9% in late trading. The gains mattered because large technology and semiconductor companies carry heavy weight in the S&P 500 and Nasdaq.

Why investors cared about oil

Brent crude fell 5.4% to $79.25 a barrel after trading between $72 and $102 during July. Oil's retreat reduced the immediate fear that energy costs would add another wave of inflation, although the conflict involving Iran and uncertainty around Persian Gulf shipping leave room for another reversal.

The 10-year Treasury yield eased to 4.63% from 4.70% on Monday. Lower yields can support stock valuations and reduce pressure on mortgages, business loans and financing for capital-intensive projects such as data centers.

The economy did not break the rally

The latest labor-market data also landed close to expectations. The Bureau of Labor Statistics reported 7.359 million job openings in June, down modestly from May. Hires held at 5.3 million and total separations were little changed at 5.4 million.

Those figures point to a labor market that is cooling without collapsing. For investors, that balance matters: a sudden deterioration could threaten company revenue, while excessive strength could keep inflation and interest rates elevated.

The caveat

A record close does not remove the market's risks. The rally remains highly sensitive to AI expectations, oil prices and Treasury yields. Palantir's surge shows how quickly a strong report can lift sentiment, but it also highlights how much investors are paying for future growth. Tuesday's close was a broad vote of confidence, not proof that geopolitical or inflation risks have disappeared.

What to watch next

Investors will now look for confirmation that earnings strength extends beyond a few AI-linked companies. The next useful signals are whether oil stays below $80, whether the 10-year yield remains near 4.6% and whether Wednesday's market keeps more of Tuesday's gains instead of giving them back. This report is general market information, not personalized investment advice.