US Stocks-S&P 500, Dow hit record highs on strong AI-linked earnings, Mideast deal hopes

Palantir Technologies gained 17.4% after raising its annual revenue forecast again, while chipmaker On Semiconductor added around 1% after forecasting quarterly revenue above expectations.

Caterpillar, seen as a bellwether for the global industrial economy, gained 12% after raising its annual revenue growth forecast, benefiting from a buildout of AI data centers that has spurred demand for its power-generation and construction equipment.

Investors have been scrutinizing results from AI-linked companies this earnings season for signs that their billion-dollar investments are yielding returns. Strong results from AI leaders Microsoft and Amazon last week were a relief and have underpinned gains on Wall Street following a turbulent July.

"The AI earnings performance has been fantastic, but the big question that investors are asking themselves now is that if it's going to be sustainable," said Eric Parnell, chief market strategist at Great Valley Advisor Group.