Stocks Rally, Oil Drops after Bessent Signals Iran Deal on Hormuz -- WSJ

By Heard on the Street Staff

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What Happened in Markets Today

Oil prices continued their slide and stocks rallied after Scott Bessent said a deal with Iran to reopen the Strait of Hormuz could come "today or tomorrow." Before his comments, investor confidence in the negotiations had been tested by conflicting messages on the status of talks, as well as a fresh attack on a ship moving through the strait. Brent crude fell 5% to below $80 a barrel. The Dow industrials climbed 1.7% and closed above 54,000 for the first time. The Nasdaq gained 2.6%, and the S&P 500 rose 1.8%.

Palantir shares jumped 29% after the data and software company boosted its outlook and said quarterly revenue doubled. The stock is still down 8% year-to-date, driven by concerns that new AI technology could disrupt its business. CEO Alex Karp described the second-quarter results as "otherworldly" and said "demand for AI sovereignty has now been unleashed."

AI-themed stocks surged. Coherent and Lumentum gained 12% and 9%, respectively. Corning was up 9% while Marvell gained 13% and Micron rose 8%. Among the triggers was a Reuters report that the Federal Communications Commission is drawing up plans to prohibit imports of Chinese optical transceivers with a ban set to take effect as soon as this year.

Caterpillar shares gained 6% after a strong earnings report, helping lift the Dow. Construction equipment sales grew 35% during the second quarter, fueled by the boom in data center and infrastructure projects.

SpaceX shares rose 9% in after-hours trading. Investors were still digesting its quarterly results, released this afternoon after the market close.

Markets at a Glance

One Big Story

A little-used Federal Reserve backstop built for the 2020 dollar shortage is being put to a use it was never designed for: bankrolling Japan's defense of the yen. Treasury Secretary Scott Bessent wants the backstop made bigger.

Japan said Monday it planned to draw on the facility, a day after Bessent publicly encouraged the Fed to expand it. The arrangement would let Tokyo raise dollars to halt the yen's slide without selling the U.S. government debt that would otherwise pay for it. Bessent said the Fed could help by raising the $60 billion limit on how much any one counterparty can borrow.

Japan held roughly $1.1 trillion in Treasurys at the end of May, so the cap, not the size of its portfolio, is what currently limits how much it can raise this way. Lifting it would let Tokyo turn more of its holdings into dollars quickly, and without selling them.

What's Coming Up

-- Companies reporting quarterly results Wednesday include Sandisk, Western Digital, Eli Lilly, Novo Nordisk, HSBC, Walt Disney, Uber and CVS.

-- Economic reports due Wednesday include ADP employment and the purchasing managers index.

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About Us

Markets P.M. catches you up on the day's most important markets moves, delivered after the closing bell. This email was written by Jonathan Weil, a columnist for Heard on the Street, The Wall Street Journal's home for financial analysis and commentary. To send us your feedback, reply to this email. Got a tip for us? Here's how to submit.

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August 04, 2026 16:18 ET (20:18 GMT)