Dow Surges 585 Points, Palantir Soars on Record Results Caterpillar Faces Tariff Test

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U.S. stocks kicked off the first full week of August with broad-based gains, as investors embraced strong tech earnings and shrugged off persistent macroeconomic risks. The Dow Jones Industrial Average jumped 585.06 points, or 1.34%, to close at 44,173.6, while the Nasdaq Composite rose 403.45 points, or 1.95%, finishing at 21,053.6. The S&P 500 gained 91.93 points, or 1.47%, ending at 6,329.94. The Russell 2000 also advanced 2.24% to close at 219.73.

The market rally was underpinned by strong breadth: nearly 80% of NYSE-listed stocks advanced, and more than 60% hit new 52-week highs. Bullish sentiment appeared to strengthen throughout the day, aided by optimism over AI-linked earnings, a resilient earnings season, and optimism ahead of key economic data due later this week.

Palantir Rockets Higher on Blowout Quarter

Shares of Palantir Technologies (PLTR) surged 4.14% to $160.66 in regular trading and added another 3.95% after hours to trade at $167.00, following the company’s release of second-quarter earnings results that smashed expectations and showcased accelerating AI-fueled momentum.

CEO Alex Karp hailed the quarter as “phenomenal,” citing a 94% Rule of 40 score and what he described as “astonishing impact of AI leverage”. Total revenue climbed 48% year-over-year to $1.004 billion, led by 68% growth in U.S. revenue and a remarkable 93% surge in U.S. commercial sales. The company closed a record $2.27 billion in total contract value, up 140% from a year ago, and generated $539 million in operating cash flow, representing a 54% margin.

Palantir also raised its full-year revenue guidance to a range of $4.142 to $4.150 billion and now expects adjusted operating income of up to $1.920 billion. U.S. commercial revenue is forecast to exceed $1.302 billion, representing at least 85% year-over-year growth.

Adjusted earnings per share came in at $0.16, and the company now holds over $6.0 billion in cash and equivalents. Investors cheered the strength of Palantir’s remaining deal value and customer growth, which rose 43% from a year earlier.

Caterpillar Faces Earnings Test Amid Tariff Crosscurrents

Ahead of its Tuesday morning earnings release, Caterpillar (CAT) is bracing for a high-stakes showdown between surging AI-related demand and mounting tariff pressures. Wall Street expects the company to report Q2 earnings of $4.90 per share on revenue of $16.26 billion—a drop of 18% and 2.6%, respectively, from a year earlier.

The company’s Energy & Transportation segment is expected to lead growth, fueled by large-engine orders for AI-powered data centers and solar turbine demand. However, tariff-related costs are projected to hit between $250 million and $350 million this quarter, threatening margins and long-term guidance.

Despite the headwinds, Caterpillar’s $35 billion backlog and stable 18%+ operating margins signal underlying resilience. Melius Research recently raised its price target to $500, citing structural tailwinds from AI infrastructure, while Citi highlighted favorable tax policies under the “Big Beautiful Bill” as a long-term catalyst.

Investors will closely monitor backlog changes, margin guidance, and management commentary on tariff mitigation. With shares already up 19% year-to-date—outpacing the broader market—expectations are elevated.

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