US equities advanced on Wednesday, with the Dow Jones Industrial Average climbing roughly 0.76% and the S&P 500 adding 0.59%, as investors weighed optimism over a potential diplomatic resolution in the Middle East against lackluster market reactions to earnings from SpaceX and Advanced Micro Devices (AMD). The Nasdaq Composite rose about 0.41%, following a strong prior session that had pushed both the Dow and the S&P 500 to record closing highs.
Sentiment was underpinned by hopes that US-Iran negotiations could lead to the reopening of the Strait of Hormuz, easing concerns about global energy supply disruptions. Oil prices, which had fallen sharply on Tuesday, recovered somewhat on Wednesday: West Texas Intermediate crude rose about 0.3% to near $76 per barrel, while Brent crude gained roughly 1% to around $80 per barrel.
SpaceX and AMD slide despite upbeat earnings
The latest corporate earnings season delivered mixed results, particularly among AI-focused names. SpaceX shares tumbled about 12% in trading after the company released its first quarterly earnings report since going public in June. Revenue nearly doubled during the quarter, and operating losses narrowed, supported by growth in its Starlink satellite communications business and AI operations. However, investors focused on the company's heavy investment plans: capital expenditures surged sixfold to $18.4 billion in the second quarter, with most spending directed toward AI infrastructure. The stock also faced pressure ahead of the expiration of its post-IPO lock-up period, which begins Thursday. Shares of Tesla, Elon Musk's other publicly traded company, slipped about 0.8%.
AMD also traded lower despite issuing quarterly revenue guidance above analysts' expectations, reflecting continued demand for AI products. The stock fell 4.5% as investors appeared to expect an even stronger outlook following the company's sharp rally this year. In contrast, Nvidia gained about 3.5%, supported by SpaceX's plan to use Nvidia hardware exclusively for its data centers. Intel declined roughly 1.5%.
Earnings lift select sectors
Outside technology, several companies posted earnings that were well received. Eli Lilly climbed about 8.6% after raising its full-year revenue forecast. Disney gained more than 2.4% after reporting fiscal third-quarter profit that exceeded Wall Street expectations. Uber, however, fell about 4.8% after issuing current-quarter adjusted earnings guidance below expectations. Alphabet added around 1% in trading.
Economic data and Fed outlook remain in focus
Investors also assessed fresh economic data ahead of Friday's closely watched nonfarm payrolls report. The ADP National Employment Report showed the US economy added 44,000 private-sector jobs in July, below economists' expectations of 70,000. The weaker reading shifted attention to the official labor market data later this week for further clues on the strength of the economy.
Federal Reserve policy remains another key focus. Minneapolis Fed President Neel Kashkari indicated that he believes it is time to begin gradually raising interest rates, while speeches from Governor Lisa Cook and San Francisco Fed President Mary Daly are expected to provide additional insight into the central bank's outlook. According to CME FedWatch data, traders are pricing in a 58.4% probability of a Federal Reserve rate increase at its September meeting.
For more on the market's reaction to AI earnings, see our coverage of Nvidia's exclusive deal with SpaceX and AMD's margin outlook. Also, check out how Middle East hopes lifted futures and SpaceX's Starlink cost burden.
This article is for informational purposes only and does not constitute financial advice.
