Tech-Led Rally Powers S&P 500 and Dow to Fresh Record Highs

Stocks extended Monday’s momentum with another powerful rally on Tuesday as strong corporate earnings and a broad rebound in semiconductor stocks fueled gains across the major indices. The S&P 500 climbed 1.8% to close above the 7,700 mark for the first time, while the Dow Jones Industrial Average advanced 1.7%, also finishing at a record high. The Nasdaq Composite led the way with a 2.6% gain, as the Russell 2000 (+1.9%) and S&P MidCap 400 (+1.8%) also posted impressive advances, with the MidCap 400 reaching a new all-time high.

Earnings remained the market’s primary catalyst, as investors continued rewarding companies that exceeded expectations while rotating back into technology stocks following July’s pullback. The information technology sector surged 4.1%, supported by another strong rally in semiconductor shares. The Philadelphia Semiconductor Index jumped 6.6%, building on Monday’s reversal with broad-based strength across the industry.

Marvell, Intel, and Sandisk were among the semiconductor sector’s biggest winners, each posting double-digit gains. Software stocks also enjoyed another standout session, led by Palantir Technologies, which soared 29.4% after delivering a blowout earnings report. The stock finished as the S&P 500’s top performer and helped lift the iShares Expanded Tech-Software Sector ETF 4.7%.

The market’s largest technology companies continued to provide leadership. Microsoft and NVIDIA extended Monday’s gains, reinforcing investor confidence in AI-driven technology companies and helping cement the sector’s return to leadership after a challenging July.

Strength was not confined to technology. Several cyclical sectors also participated in the advance, highlighting improving market breadth.

The materials sector gained 2.0%, supported by continued strength in Freeport-McMoRan as precious metals prices moved higher. Industrials advanced 1.8%, led by electrical equipment manufacturers and Caterpillar, which rallied 5.6% after reporting better-than-expected earnings and raising its outlook.

Financial stocks also contributed to the rally. The sector rose 0.9%, with Goldman Sachs and JPMorgan Chase helping propel the Dow Jones Industrial Average to another record close.

Although technology remained the primary driver of the market’s gains, participation broadened throughout the session. The S&P 500 Equal Weight Index climbed 1.4%, while the Russell 2000 and S&P MidCap 400 both posted strong advances, signaling that investors were increasingly willing to look beyond the market’s largest companies.

Even so, five S&P 500 sectors finished lower as capital rotated away from more defensive areas. Utilities fell 0.6%, pressured by a sharp decline in NRG Energy after the company missed earnings expectations. Health care slipped 0.1%.

The energy sector lost 0.5% as WTI crude oil futures dropped $4.63, or 5.8%, to settle at $75.73 per barrel. Oil prices declined after Treasury Secretary Scott Bessent said the United States and Iran could be nearing an agreement to reopen the Strait of Hormuz, easing concerns about global energy supplies and helping Treasury yields move lower.

Consumer discretionary was another laggard, falling 0.5%. Amazon gave back a portion of Monday’s post-earnings rally, while Aptiv tumbled after missing revenue expectations. Chipotle Mexican Grill also came under pressure following reports of a possible salmonella outbreak.

The real estate sector edged 0.1% lower as Alexandria Real Estate Equities declined after releasing quarterly results.

Tuesday’s session reinforced the market’s improving tone following July’s semiconductor-led correction. Investors continued rewarding companies that delivered strong earnings while easing geopolitical tensions provided an additional boost to sentiment. Attention now turns to another pivotal round of technology earnings after the closing bell, with Advanced Micro Devices and SpaceX set to report. Their results could provide the next important test of whether the market’s renewed technology leadership can extend further into August.

Our FTInvest 11 model portfolio declined 1.22% to close at 1,067.87, giving back a portion of yesterday’s strong advance. Despite the pullback, the portfolio remains comfortably above the 1,000 level and continues to trade approximately 2.6% below its all-time closing high of 1,096.33, remaining within close reach of record territory.

FTInvest 11 is now up approximately +15.05% year-to-date, maintaining a robust double-digit return for 2026. Today’s decline appears to represent a normal retracement following Monday’s sharp rally rather than a material change in the portfolio’s overall trend. FTInvest 11 continues to demonstrate resilience after recovering from the June correction, with its disciplined, value-driven investment strategy remaining focused on long-term capital appreciation despite short-term market fluctuations.