By Caroline Valetkevitch and Stefano Rebaudo
NEW YORK/MILAN, Aug 4 (Reuters) - Stock indexes rose sharply on Tuesday, with the Dow and S&P 500 hitting record highs following upbeat forecasts from Caterpillar and other companies, and oil prices extended recent sharp declines.
A global stock index also hit a record intraday high.
The Japanese yen weakened, but held on to most of its intervention-driven gains after last week's joint action by Tokyo and Washington to support the currency.
Weighing on oil
were comments by Qatari and U.S. officials that raised hopes for a diplomatic resolution to the Iran war that could improve oil flows through the Strait of Hormuz.
U.S. Secretary of State Marco Rubio said on Tuesday there was progress in talks with Iran and Oman about moving more ships through the strait, but a final agreement had yet to be reached. Treasury Secretary Scott Bessent earlier said that a deal with Iran to reopen the strait could come as soon as Tuesday or Wednesday.
U.S. crude fell 5.43% to $75.98 a barrel and Brent dropped to $79.38 per barrel, down 5.24% on the day.
Shares of Caterpillar, often seen as a bellwether for the global industrial economy, rose after the company increased its annual revenue growth forecast as it benefited from a buildout of AI data centers, while shares of Palantir Technologies surged as the company also raised its annual revenue forecast.
Investors are reacting to "stronger earnings and stronger expectations," said Oliver Pursche, senior vice president and adviser for Wealthspire Advisors in Westport, Connecticut. "There's a general sense of optimism out there and that's being reflected."
More than 80% of S&P 500 companies are beating analysts' earnings expectations for the last quarter, according to LSEG data.
The Dow Jones Industrial Average rose 933.95 points, or 1.76%, to 54,112.36, the S&P 500 rose 115.96 points, or 1.53%, to 7,716.66 and the Nasdaq Composite rose 548.22 points, or 2.12%, to 26,462.11.
MSCI's gauge of stocks across the globe rose 12.87 points, or 1.14%, to 1,143.88.The pan-European STOXX 600 index rose 0.73%.
YEN EASES AFTER INTERVENTION-DRIVEN RALLY
The Japanese yen weakened 0.18% against the greenback to 157.45 per dollar after coordinated intervention by U.S. and Japanese authorities to prop up the yen last week.
The Japanese currency remains stronger against the greenback compared with levels a week ago that prompted official support and marked the first U.S. intervention in the Japanese foreign exchange market in 15 years.
However, Japan's expansionary fiscal policy and the Bank of Japan's gradual pace of rate hikes could weigh on the yen, some market participants warn.
The dollar index, which measures the greenback against a basket of currencies, fell 0.1% to 99.91, with the euro up 0.11% at $1.152.
U.S. Treasury yields fell as oil prices tumbled on hopes for a deal to end the Iran war. That led traders to reprice for lower odds of a Federal Reserve interest rate hike in September.
Most analysts believe Fed Chair Kevin Warsh does not want to hike rates, and the incoming data could provide him enough cover to stay put.
The yield on benchmark U.S. 10-year notes fell 4.91 basis points to 4.635%.
(Reporting by Caroline Valetkevitch in New York and Stefano Rebaudo. Editing by Jamie Freed, Mark Potter and Deepa Babington)
