Why Did U.S. Stocks Set New Records on August 4? Hormuz and Interest Rates Are Back in Focus on September 7
2026-08-04 saw the Dow Jones Industrial Average and S&P500 reach all-time closing highs. At the time, hopes for negotiations to reopen the Strait of Hormuz and strong earnings from AI-related companies, including Palantir and Caterpillar, helped push stocks higher. However, market conditions had changed by September 7. Tensions surrounding Hormuz intensified again, and international oil prices rose. The situation a month earlier, when hopes for negotiations drove oil prices lower, should therefore not be assumed to reflect current conditions.
How Much Did U.S. Stocks Rise on August 4?
On August 4, both the Dow and S&P500 set new closing records, while the Nasdaq also gained more than 2%. The Dow posted its second consecutive record close, while the S&P500 reached a new closing high for the first time since July 2.
The Dow Jones Industrial Average closed at 54,085.88, up 907.47 points, or 1.71%, from the previous trading session. The S&P500 finished at 7,736.52, gaining 136.02 points, or 1.79%. The Nasdaq Composite ended trading at 26,584.99, rising 671.10 points, or 2.59%.
Comparing percentage gains across the three indexes, the Nasdaq performed best. According to the author's calculations, the Nasdaq's 2.59% gain exceeded the Dow's 1.71% by 0.88% percentage points and the S&P500's 1.79% by 0.80% percentage points.
The Philadelphia Semiconductor Index surged 6.6% that day, while the S&P500 information technology sector gained 4.1%, posting the strongest performance among the 11 major sectors. Rather than simply being a day when the broader market advanced, it was a session marked by particularly strong gains in AI- and semiconductor-related stocks.
Why News About the Strait of Hormuz Affected the Stock Market
What markets responded to at the time was not a confirmed announcement that the Strait of Hormuz issue had been resolved, but expectations that the United States and Iran might be approaching an agreement to reopen the strait. According to reports on August 4, U.S. Treasury Secretary Scott Bessent suggested that an agreement with Iran could emerge within days. Other reports indicated that diplomatic efforts toward a resolution were continuing.
International oil prices fell by approximately 5% that same day. October Brent crude fell 5.3% to 79.36 dollars per barrel, while September WTI crude declined 5.7% to close at 75.77 dollars. U.S. Treasury yields also fell alongside international oil prices, and the market-implied probability of a Federal Reserve rate increase in September declined from 67.2% in the previous session to 56.9%.
The important point is the sequence of events at the time. Growing expectations for negotiations over Hormuz pushed oil prices lower, reducing concerns that rising energy costs could drive inflation higher. Financial markets interpreted this development as an easing of interest-rate pressures. However, because no agreement had been finalized, saying that stocks rose because the Hormuz issue had been resolved would go beyond what was actually confirmed.
What Did Palantir and Caterpillar's Earnings Reveal About AI?
Among AI-related companies, Palantir and Caterpillar stood out during the market rally on August 4. Palantir shares surged 29.5% in a single day after the company raised its annual revenue outlook, while Caterpillar gained 5.6%.
Palantir reported revenue of 19 hundred million 3,546 ten thousand dollars for the 2 quarter of 2026, an increase of 93% from the same period a year earlier. Revenue from its U.S. commercial business reached 7 hundred million 6,400 ten thousand dollars, up 149%, and the company raised its annual revenue forecast to a range of 81 hundred million 5,000 ten thousand to 81 hundred million 5,800 ten thousand dollars.
These figures mattered because investors were closely watching whether the substantial investments being made by AI-related companies were translating into actual revenue growth. Palantir's earnings announcement confirmed both revenue growth and an upward revision to its full-year outlook.
Although Caterpillar is traditionally a heavy-equipment manufacturer, investors also viewed it as a potential beneficiary of AI investment because of the growing electricity demand associated with AI data centers. Caterpillar reported sales and revenues of 205 hundred million dollars for the 2 quarter of 2026, an increase of 24% from 166 hundred million dollars in the same quarter a year earlier. Earnings per share were 7.77 dollars, while adjusted earnings per share were 8.17 dollars.
According to the author's calculations, Caterpillar's quarterly revenue increased by approximately 39 hundred million dollars over 1 years. Factors cited by the company included an increase of 31 hundred million dollars in sales volume and a price effect of 5 hundred million 9,500 ten thousand dollars.
However, simply attributing the entire market rally to strong earnings from AI companies would not adequately explain what happened that day. In addition to corporate earnings, falling oil prices, declining Treasury yields, and expectations for negotiations over Hormuz all contributed to stock performance.
A Month Later, in September, the Same Market Logic No Longer Applied
The biggest changes by September 7 involved the Strait of Hormuz and international oil prices. On August 4, hopes for negotiations had driven oil prices lower. By September, however, renewed attacks between the United States and Iran had heightened concerns about supply disruptions. On September 7, Brent crude traded above 97 dollars per barrel, while WTI also climbed into the 92-dollar range.
A simple comparison between Brent crude's closing price of 79.36 dollars on August 4 and its reported price of 97.48 dollars on September 7 shows a difference of 18.12 dollars. According to the author's calculations, this represents a level approximately 22.8% higher. However, these prices were recorded at different times and do not represent a direct comparison of contracts with identical maturities. They should therefore not be interpreted as a one-month investment return.
Conditions surrounding Hormuz itself had also changed. On September 7, Iran announced plans to establish a new restricted maritime zone in the Gulf region. Maritime tensions had intensified again after the United States and Iran exchanged attacks involving vessels.
Therefore, the sequence described in articles from early August—'hopes for a Hormuz agreement → falling oil prices → record stock market highs'—explains the conditions of a particular trading day. Assuming that the Hormuz issue had been resolved through an agreement or that international oil prices were continuing to decline as of September 7 would be inconsistent with current conditions.
U.S. Stocks Were Again Watching Interest Rates in Early September
Looking at the most recent U.S. trading sessions, stocks did not continue moving in the same direction every day after the record highs on August 4. On September 4, all 3 major U.S. stock indexes declined as stronger-than-expected August employment data increased concerns about the possibility of another Federal Reserve interest-rate hike.
On September 4, the Dow fell 0.51%, the S&P500 declined 0.38%, and the Nasdaq dropped 0.29%. U.S. nonfarm payrolls for August increased by 16 ten thousand 2,000 people, substantially exceeding market expectations of 5 ten thousand 6,000 people. Although strong employment can be a positive economic signal, investors interpreted the data as suggesting that monetary tightening might continue for longer to contain inflation.
September 7 was a U.S. Labor Day market holiday, meaning there was no new regular-session closing price for U.S. stocks. Therefore, it would also be inaccurate to say on the afternoon of September 7 in Korean time that 'U.S. stocks rose today' or 'the market reached an all-time high today.' The latest U.S. regular-session results should be distinguished from current movements in Asian markets.
The Key Numbers to Watch Next: Oil Prices, Inflation, and Interest Rates
When revisiting the record highs on August 4, the most important question is not simply why stocks rose that day. It is also necessary to determine whether the conditions that drove the rally remain in place.
As of September 7, tensions surrounding Hormuz had intensified again, and both Brent and WTI crude prices were higher than in early August. U.S. employment data had exceeded expectations, while markets were again focusing on the Federal Reserve's September interest-rate decision and inflation indicators as important variables.
Earnings from AI-related companies also remain worth monitoring. In August, Palantir and Caterpillar's results had a positive effect on investor sentiment, but not all AI-related earnings announcements generated the same response in September. On September 3, Broadcom shares declined after its outlook fell short of elevated market expectations, while some software stocks posted strong gains.
Ultimately, the record highs in U.S. stocks on August 4 cannot be explained by 'AI alone' or 'Hormuz alone.' It was a day when corporate earnings, international oil prices, Treasury yields, and expectations for Middle East negotiations all moved in directions favorable to stocks. By September 7, conditions surrounding Hormuz and oil prices had changed significantly. Rather than relying on older articles about record highs, examining current oil prices and changes in expectations for U.S. interest rates offers a more accurate understanding of market conditions.
※ This article is provided for informational purposes to help readers understand market trends and does not constitute investment advice or a recommendation to buy any particular stock or asset. Readers are responsible for their own investment decisions and outcomes.