U.S. stocks gave back part of their earlier gains on Wednesday but remained mostly positive.
Investor sentiment received support from cautious optimism over a possible agreement to reopen the Strait of Hormuz. However, disappointing market reactions to earnings from SpaceX and Advanced Micro Devices limited the broader advance.
Dow Leads Wall Street Higher
At 10:56 ET, or 14:56 GMT, the S&P 500 gained 0.2% to trade at 7,753.94 points.
The Dow Jones Industrial Average climbed 1% to 54,620.48 points, while the technology-focused Nasdaq Composite was nearly unchanged at 26,595.89 points.
The Dow significantly outperformed the other major U.S. stock indexes during the session.
S&P 500 and Dow Reach New Records
Wall Street had recorded strong gains on Tuesday as technology shares recovered from heavy losses during July.
The S&P 500 and Dow Jones rose between 1.7% and 1.8%. Both indexes ended the session at record closing highs.
Meanwhile, the Nasdaq Composite advanced 2.6% and reached its highest level in approximately six weeks.
The rebound reflected improving risk appetite after a difficult period for major technology stocks.
Strait of Hormuz Deal Hopes Lift Sentiment
Investor confidence improved after several U.S. officials suggested that an agreement to reopen the Strait of Hormuz could be close.
President Donald Trump was among those who indicated that diplomatic progress was being made.
Axios later reported that the United States, Oman and Iran could announce an agreement as early as Wednesday.
However, Iranian media offered a more cautious assessment. Reports suggested that Tehran believed a deal could be delayed because of continuing U.S. threats.
Oil Prices Remain Volatile
Oil prices traded slightly higher following reports that Iran-backed Houthi forces in Yemen had attacked Saudi vessels in the Red Sea.
Despite the latest increase, crude oil prices have fallen sharply during the week.
Traders have become more optimistic that a Middle East agreement could restore energy shipments through the Strait of Hormuz.
Before the conflict began in late February, roughly one-fifth of the world’s oil and liquefied natural gas passed through the strategic waterway.
Reopening the route could increase available supply and reduce pressure on global energy prices.
SpaceX and AMD Weigh on Technology Stocks
Losses in SpaceX and AMD reduced optimism surrounding the recovery in technology shares.
SpaceX stock fell more than 8% after the company published its first quarterly results since becoming publicly listed.
The aerospace company reported stronger-than-expected revenue and a smaller quarterly loss than analysts had forecast.
However, concerns about high spending on artificial intelligence infrastructure overshadowed the positive results.
Analysts warned that elevated investment costs were placing pressure on SpaceX’s free cash flow.
Elon Musk Sets Ambitious SpaceX Targets
SpaceX Chief Executive Elon Musk outlined aggressive growth plans following the earnings report.
Musk said the company was targeting annual revenue of $1 trillion by 2030.
He also suggested that SpaceX could begin placing data centres into orbit as early as next year.
Although the plans highlighted the company’s growth ambitions, investors remained concerned about the substantial investment required to fund them.
AMD Shares Slide After SpaceX Decision
AMD shares dropped more than 7% after Musk announced that SpaceX would stop purchasing processors from the chipmaker.
Musk said SpaceX had chosen to build exclusively around Nvidia’s Blackwell artificial intelligence servers, describing the technology as the strongest available architecture.
The decision represented a shift from earlier comments suggesting that SpaceX and Tesla would use processors from both AMD and Nvidia.
The announcement raised concerns about AMD’s ability to compete for major artificial intelligence infrastructure contracts.
Strong AMD Revenue Fails to Support Stock
The SpaceX decision overshadowed an otherwise strong quarterly performance from AMD.
The semiconductor company generated $11.5 billion in revenue during the quarter ending June 27.
The figure came in slightly above Wall Street expectations.
Nevertheless, investors focused more heavily on the potential loss of future SpaceX business than on AMD’s latest sales results.
Market Outlook Depends on Diplomacy and Earnings
U.S. stocks remain supported by hopes that diplomatic progress in the Middle East could improve global energy supplies and reduce inflation risks.
However, mixed technology earnings and concerns about heavy artificial intelligence spending are limiting gains.
Investors will continue monitoring developments surrounding the Strait of Hormuz, oil prices and upcoming corporate results.
For now, the S&P 500 and Dow remain close to record levels, while weakness in SpaceX and AMD continues to weigh on the technology sector.
