GLOBAL MARKETS: Stock indexes reach record highs, oil extends decline

NEW YORK/MILAN – Major stock indexes reached record highs on Tuesday after strong corporate earnings and upbeat forecasts from major companies boosted investor confidence, while oil prices extended steep losses amid renewed hopes for a diplomatic breakthrough that could improve crude shipments through the Strait of Hormuz.

The Dow Jones Industrial Average, the S&P 500, and Europe's STOXX 600 index all closed at record highs as investors welcomed stronger-than-expected earnings reports and improving business outlooks.

Oil prices, meanwhile, fell sharply after comments from U.S. and Qatari officials fueled expectations of progress in talks aimed at easing tensions with Iran and reopening shipping routes through the Strait of Hormuz.

U.S. Secretary of State Marco Rubio said discussions involving Iran and Oman had made progress toward allowing more ships to pass through the vital waterway, although a final agreement had not yet been reached. Treasury Secretary Scott Bessent also said a deal to reopen the strait could be finalized as early as Tuesday or Wednesday.

Brent crude settled at $79.36 per barrel, down 5.3%, while U.S. West Texas Intermediate crude fell 5.7% to $75.77 per barrel. Both benchmarks closed at their lowest levels in about three weeks.

Investor sentiment was also lifted by strong corporate earnings. Shares of Caterpillar rose after the heavy equipment maker raised its annual revenue growth forecast, citing increased demand tied to the expansion of artificial intelligence data centers. Palantir Technologies also climbed after raising its full-year revenue forecast.

"There's a general sense of optimism out there," said Oliver Pursche, senior vice president and adviser at Wealthspire Advisors. He noted that stronger earnings and improving expectations continue to support the stock market.

According to LSEG data, more than 80% of companies in the S&P 500 have reported quarterly earnings that exceeded analysts' expectations.

The Dow Jones Industrial Average jumped 907.47 points, or 1.71%, to 54,085.88, while the S&P 500 gained 136.02 points, or 1.79%, to 7,736.52. Both indexes posted record closing highs. The Nasdaq Composite surged 671.10 points, or 2.59%, to 26,584.99.

After the closing bell, shares of SpaceX fell about 7% after the aerospace company released its first quarterly earnings report as a publicly traded company. The report showed revenue climbed 92%, driven by continued growth in its Starlink satellite internet and artificial intelligence businesses.

Globally, MSCI's index of world stocks rose 1.3% to another record high, while Europe's STOXX 600 gained 0.73%, supported by technology stocks and strong corporate earnings.

In currency markets, the Japanese yen weakened slightly against the U.S. dollar but remained stronger than levels seen before last week's coordinated intervention by Japanese and U.S. authorities. The yen traded at 157.79 per dollar, while the U.S. dollar index edged down 0.13% to 99.88.

U.S. Treasury yields also declined as falling oil prices reduced expectations that the Federal Reserve would raise interest rates in September.

The yield on the interest rate-sensitive two-year Treasury note fell to 4.194%, its lowest level in two weeks, while the benchmark 10-year Treasury yield slipped to 4.627%. Analysts said investors increasingly expect Federal Reserve Chair Kevin Warsh to keep interest rates unchanged if upcoming economic data remain favorable. -Reporting by Caroline Valetkevitch in New York and Stefano Rebaudo. Editing by Jamie Freed, Mark Potter, Deepa Babington and Aurora Ellis/Reuters