ASX set to rise as Wall Street surges; SpaceX results ahead

The US stock market is rushing toward records as profits keep piling up for companies and as oil prices ease.

The S&P 500 shot up 1.9 per cent and is on track to clear its all-time high set a couple of months ago. The Dow Jones added 1009 points, or 1.9 per cent, to its own record set the day before, while the Nasdaq composite was 2.6 per cent higher.

The Australian sharemarket is set to rise, with futures pointing to a gain of 24 points, or 0.3 per cent, at 4.56am AEST. The ASX jumped 1.4 per cent to a record high on Tuesday. The Australian dollar is stronger at US70.47¢.

Despite worries about high inflation, the war in Iran and a possible bubble in stock prices because of euphoria around the boom in artificial-intelligence technology, Wall Street is nearing its latest apex in large part because profits are soaring for companies. Stock prices tend to follow the path of corporate earnings over the long term.

Palantir Technologies helped lead the way and soared 29.5 per cent after CEO Alex Karp said its overall revenue leaped 93 per cent in what he called an “otherworldly” quarter. Besides reporting a stronger profit for the spring than analysts expected, the AI company also raised its revenue forecast for the full year of 2026.

Caterpillar climbed 6.6 per cent after the heavy-equipment maker likewise reported stronger profit and revenue than analysts expected. It was the first time Caterpillar made more than $US20 billion in sales and revenue in a quarter, and CEO Joe Creed said it’s seeing strong order rates and a growing backlog across its main businesses.

Caterpillar is also benefiting from the AI boom through increased orders for turbines used to power data centres, among other things.

They’re the latest companies to deliver even better profits for the latest quarter than investors expected, following strong results from Amazon, Microsoft and others. Coming into this week, companies in the S&P 500 index were on track to deliver growth of nearly 50 per cent in earnings per share for the spring from a year earlier, according to FactSet.

That would be the biggest such jump since 2021, when the economy was roaring back to life after cratering in the COVID-19 pandemic. With corporate profits up so much, while stock prices are still roughly where they were two months ago, stocks don’t look as expensive as they did before, according to Phil Segner, a co-portfolio manager at the Leuthold Group.

SpaceX’s first results will drop after the closing bell.

Also helping stocks on Tuesday was another drop for oil prices.

Brent crude, the international standard, sank 5.4 per cent to $US79.25 per barrel as hope once again took over from fear in the oil market. It had swung sharply between $US72 and $US102 through July on uncertainty about when the war with Iran would allow oil tankers to freely exit the Persian Gulf again to deliver crude around the world.

It’s jerked up and down many times as uncertainty built, receded and then built again, not only week to week but also hour to hour. Analysts warned more swings could still be ahead, but the latest drop in oil prices nevertheless helped to ease Wall Street’s worries about inflation. That in turn pulled down yields in the bond market, which relaxes pressure on the overall economy and on prices for stocks and other investments.

The yield on the 10-year Treasury fell to 4.63 per cent from 4.70 per cent Monday and from 4.75 per cent at the end of last week. That’s a notable move for the bond market, though it remains well above its 3.97 per cent level from before the war with Iran.

Higher yields make it more expensive for all kinds of Americans to borrow money, from homebuyers looking for a mortgage to big companies looking to build AI data centres.

Reports on the US economy, meanwhile, showed it remains resilient even though inflation remains worse than anyone would like. One said US employers were advertising nearly 7.4 million job openings at the end of June, a slight slowdown from May’s level but close to economists’ expectations.

In stock markets abroad, indexes rose modestly across much of Europe and Asia.

South Korea’s Kospi had a more significant move and rose 1.6 per cent. Seoul has been home to some of the world’s sharpest swings recently because its stock market is dominated by two companies swept up in AI mania, Samsung Electronics and SK Hynix. The Kospi had dropped 5.1 per cent and soared 17.9 per cent in the prior two days.

Stocks of computer chip companies also strengthened on Wall Street, where gains of 2.9 per cent for Nvidia, 7.5 per cent for Broadcom and 8.1 per cent for Micron Technology were some of the strongest forces lifting the S&P 500.

AP

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