U.S. stocks held near record territory on Wednesday as the Dow Jones Industrial Average notched a fresh record close amid optimism over a potential peace deal in the Middle East. Meanwhile, big technology companies slumped and SpaceX shares tumbled 13.6% following the company’s first quarterly earnings report as a public company.
Wall Street meandered to a mixed finish on Wednesday, keeping major indices near record highs following two days of strong gains that kicked off August. The S&P 500 fell 12.97 points, or 0.2%, to close at 7,723.55, after spending most of the day higher following a record surge on Tuesday. The Dow Jones Industrial Average climbed 263.24 points, or 0.5%, to reach a record 54,349.12, while the Nasdaq Composite dropped 221.55 points, or 0.8%, to 26,363.44.
Middle East Diplomacy and Oil Prices
Uncertainty surrounding the U.S. conflict with Iran continued to influence trading floors as investors weighed potential diplomatic breakthroughs. President Donald Trump indicated that a deal to reopen the Strait of Hormuz could materialize as early as Wednesday. Separately, a proposed agreement between Iran and Oman would grant Tehran control over ships entering the Gulf through the strait, according to information provided to a senior Iranian source and two regional officials.
That diplomatic progress offered some relief to energy markets that have grappled with supply disruptions since the five-month-old conflict began in late February. Brent crude, the international standard, dipped 0.1% to settle at $79.45 a barrel. At various points during the conflict, oil prices climbed as high as $102 per barrel, driving up gasoline costs and adding persistent pressure to inflation figures monitored closely by the Federal Reserve.
SpaceX Earnings and Semiconductor Shifts
Corporate earnings reports brought sharp divergences across the technology sector. Elon Musk-led SpaceX fell 13.6% following the release of its first quarterly report as a public company late Tuesday. While the company’s revenue nearly doubled and operating losses narrowed on strong Starlink and AI business growth, shares tumbled over investor concerns regarding sustained spending on artificial intelligence infrastructure such as data centers. Additional pressure on the stock could emerge from the expiration of its post-IPO lock-up period starting Thursday.
In a related semiconductor development, SpaceX announced it will exclusively use Nvidia’s chips for its artificial intelligence technology. That announcement provided a 3.4% boost to Nvidia while weighing on competitor Advanced Micro Devices, whose shares dropped 7%. Musk had previously stated that both SpaceX and Tesla would utilize hardware from both manufacturers.
Sector Performance and Labor Market Data
Blue-chip gains helped offset the tech-sector drag. Amgen shares rose 4.6% after reporting a 9% increase in second-quarter sales, adding more than 100 points to the Dow. Eli Lilly jumped 4.9% after raising its full-year revenue forecast, helping push the S&P 500 healthcare sector up 1.3%. The Walt Disney Co. also supported the broader market, rising 3.6% following strong profit forecasts aided by a $1 billion box office haul from Toy Story 5
and theme park revenue.
Economic data released Wednesday showed U.S. private payrolls grew by 44,000 in July according to the ADP national employment report, pointing to a slowing but stable labor market ahead of Friday’s comprehensive government employment figures. Meanwhile, the Institute for Supply Management reported that its non-manufacturing purchasing managers index inched up to 54.1 last month from 54.0 in June.
Treasury yields edged lower during the session, with the 10-year Treasury yield slipping to 4.61% from 4.63% late Tuesday. Expectations for an interest rate adjustment by the Federal Reserve at its September meeting have shifted, with CME FedWatch data showing a 54.9% probability of a rate hike, down from 58.3% a week prior.
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