The Dow Jones Industrial Average advanced to a new closing high Wednesday as investors tracked possible progress toward reopening the Strait of Hormuz, while post-earnings declines in SpaceX and AMD pulled technology shares lower.
By yourNEWS Media Newsroom
The Dow Jones Industrial Average reached another record Wednesday as signs of movement in negotiations involving Iran and the Strait of Hormuz supported economically sensitive stocks, while weakness in SpaceX and Advanced Micro Devices ended the Nasdaq Composite’s four-session winning streak.
Preliminary closing data showed the Dow gaining 264.04 points, or 0.49%, to finish at 54,349.92. The S&P 500 slipped 13.33 points, or 0.17%, to 7,723.19, while the Nasdaq fell 225.32 points, or 0.85%, to 26,359.67.
Investors were assessing a proposed arrangement between Iran and Oman that could restore commercial traffic through the Strait of Hormuz. A senior Iranian source and two regional officials said the plan would give Tehran control over vessels entering the Persian Gulf, representing one of the most substantial concessions offered to Iran during the negotiations.
Hopes for a broader peace agreement had already driven gains earlier in the week. The Dow and S&P 500 both closed at record levels Tuesday as oil prices and U.S. Treasury yields declined, easing concerns that wartime inflation could force the Federal Reserve to raise interest rates.
Wednesday’s more cautious trading reflected doubts about whether the latest diplomatic movement would result in a lasting agreement after repeated shifts in the negotiations.
“It’s just a straight rocket shot that we’ve gone up, we didn’t even take a breath,” Kenny Polcari, chief market strategist at Slatestone Wealth in Jupiter, Florida, said.
“It’s progress, but the market’s just going, we’re not going to give it to you this time until we actually see the progress, because how many times have we been jerked around over the last four months?”
The Dow benefited from gains in several large companies reporting favorable quarterly results, while declines in prominent technology stocks placed greater pressure on the Nasdaq.
SpaceX shares fell after the Elon Musk-led company delivered its first quarterly earnings report since becoming publicly traded. Revenue nearly doubled and operating losses narrowed as Starlink satellite communications and artificial intelligence operations expanded.
Investors nevertheless focused on whether SpaceX can sustain its heavy spending on AI-related projects, including data centers. Concerns about those costs outweighed the company’s revenue growth and improving operating performance.
The stock could face further pressure beginning Thursday as SpaceX’s post-initial public offering lock-up period starts to expire, potentially allowing additional shares to enter the market.
AMD also declined despite forecasting quarterly revenue above analysts’ estimates. The chipmaker’s outlook reflected continued strength in demand for artificial intelligence products, but investors sought clearer evidence that extensive AI spending across the technology industry would translate into more rapid growth.
The pullbacks in SpaceX and AMD helped push the Nasdaq lower for the first time in five trading sessions.
Healthcare companies provided support elsewhere in the market. Amgen shares rose after the drugmaker reported a 9% increase in second-quarter sales, helping lift the Dow.
Eli Lilly also advanced after raising its full-year revenue forecast. The healthcare sector finished among the S&P 500’s strongest-performing groups during the session.
Disney contributed additional support to the Dow after its shares increased following third-quarter profit results that exceeded expectations.
Investors also reviewed new economic data showing slower private-sector hiring and continued, though slightly weaker than forecast, growth in the service economy.
The ADP National Employment Report showed that private payroll growth slowed in July. The release was the second in a series of labor-market reports scheduled this week before the federal government publishes its payroll figures Friday.
Separately, the Institute for Supply Management said its nonmanufacturing purchasing managers index increased to 54.1 in July from 54.0 in June.
The reading fell below the 54.5 level expected by economists surveyed by Reuters but remained above 50, the threshold indicating that the service sector is expanding.
Recent reports have generally portrayed the labor market as stable. Inflation risks associated with the war with Iran, which began at the end of February, have remained a central concern for investors evaluating the Federal Reserve’s next move.
Higher energy and transportation costs could renew broader price pressures, while any agreement restoring movement through Hormuz could reduce those risks and lessen the need for tighter monetary policy.
Minneapolis Federal Reserve President Neel Kashkari told CNBC that he believes policymakers should begin gradually increasing interest rates.
Federal Reserve Governor Lisa Cook and San Francisco Fed President Mary Daly were also scheduled to speak later Wednesday.
Futures-market pricing showed that expectations for a September rate increase had eased. The probability stood at 54.9%, according to CME FedWatch, down from 58.3% one week earlier.
The session left major indexes moving in different directions as investors balanced tentative diplomatic progress, mixed economic figures and renewed scrutiny of the enormous sums being committed to artificial intelligence development.
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