The S&P 500 and Dow traded at record highs on Wednesday as hopes of a Middle East peace breakthrough outweighed declines in SpaceX and AMD, whose upbeat forecasts failed to impress investors, Reuters reported.
SpaceX, led by Elon Musk, reported a near-doubling of revenue and narrower operating losses in its first results since going public, driven by strong growth in its Starlink satellite communications and AI businesses.
However, shares of the rocket company fell 12.5% in early trading after executives signalled that heavy spending would continue. The stock could face further pressure when its post-IPO lock-up period begins expiring on Thursday. Shares of Musk’s Tesla dropped 1.6%.
"This is the culmination of the story of this entire earnings season. SpaceX beat analysts' expectations on revenue, but spending on AI is getting out of hand, with no signs of slowing down anytime soon," said Nic Puckrin, cross-asset analyst and founder of Coin Bureau, according to the Reuters report.
Advanced Micro Devices (AMD) forecast quarterly revenue above Wall Street estimates, reflecting robust demand for AI products. However, its shares fell 6.5% as investors appeared to seek a stronger outlook after the stock’s 142% surge this year.
Shares of rival Nvidia, which has lagged AMD this year, rose 3.4%, supported by SpaceX’s plan to use Nvidia hardware exclusively in its data centres.
Most megacap stocks advanced, with Microsoft and Alphabet gaining about 1% each. Seven of the S&P 500’s 11 sectors traded higher, led by a 1.9% rise in healthcare, while utilities fell nearly 1%.
Wednesday’s gains extended Wall Street’s recent rally, which pushed the S&P 500 and Dow to fresh record highs amid growing confidence in AI-linked stocks and hopes of easing tension in West Asia.
The Dow Jones Industrial Average rose 450.80 points, or 0.83%, to 54,536.68, the S&P 500 gained 46.98 points, or 0.61%, to 7,783.50.
The Nasdaq Composite rose 109.43 points, or 0.41%, to 26,694.42, reaching its highest level in more than a month.
Investors also assessed earnings from other sectors. Eli Lilly climbed 7.3% after raising its full-year revenue forecast, while Disney gained 2.9% after beating third-quarter profit expectations.
Arista Networks advanced 7.3% after the networking-equipment maker forecast third-quarter revenue above estimates. Uber fell 5.5% after projecting current-quarter adjusted earnings below expectations.
On the economic front, U.S. private payroll growth slowed in July, according to the ADP National Employment Report. Investors will now turn their attention to Friday’s official nonfarm payrolls report.
Recent data have generally pointed to a resilient economy, but uncertainty remains as Middle East tensions keep energy costs elevated and the Federal Reserve provides little guidance on the path of monetary policy.
Minneapolis Fed President Neel Kashkari told CNBC in an interview that he believed it was time to begin gradually raising interest rates. At least two other senior Fed officials were scheduled to speak later in the day.
Advancing stocks outnumbered decliners by 1.26 to 1 on the NYSE and 1.13 to 1 on the Nasdaq. The S&P 500 recorded 22 new 52-week highs and one new low, while the Nasdaq Composite posted 52 new highs and 25 new lows.
