The Dow Jones Industrial Average closed at a record high on Wednesday as hopes for progress towards a peace deal involving Iran helped support sentiment, although a sell-off in SpaceX and Advanced Micro Devices (AMD) shares pulled the Nasdaq lower.
The Dow rose 263.18 points, or 0.49%, to 54,349.06 while the S&P 500 slipped 13 points, or 0.17%, to 7,723.52. The Nasdaq Composite fell 221.55 points, or 0.83%, to 26,363.44, ending a four-session winning streak.
Markets have been buoyed by hopes of progress towards resolving the conflict with Iran, which has also pushed oil prices and US Treasury yields lower. The resulting easing in inflation concerns has reduced expectations of a Federal Reserve rate hike in September.
“It’s just a straight rocket shot that we’ve gone up, we didn’t even take a breath,” said Kenny Polcari, chief market strategist at Slatestone Wealth in Jupiter, Florida.
“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?”
SpaceX was among the biggest drags on the Nasdaq, with shares plunging 13.6% after the Elon Musk-led company reported its first earnings since going public.
Revenue nearly doubled while operating losses narrowed, helped by growth in its Starlink satellite communications and artificial intelligence businesses. However, investors were concerned about the scale of its spending on AI infrastructure, including data centres.
The stock could also face further pressure with its post-IPO lock-up period set to expire from Thursday.
AMD shares also fell 7% despite the chipmaker forecasting quarterly revenue above Wall Street expectations on strong demand for AI-related products. Investors appeared to be looking for clearer evidence that heavy AI infrastructure spending will translate into faster growth.
The Dow, meanwhile, received support from a 4.6% jump in Amgen after the drugmaker reported a 9% increase in second-quarter sales. Eli Lilly rose 4.9% after raising its full-year revenue forecast, helping the S&P 500 healthcare sector gain 1.3%.
Disney also contributed to the Dow’s gains, with its shares rising 3.6% after the entertainment company beat third-quarter profit expectations.
On the economic front, US private payroll growth slowed in July, according to the ADP national employment report, ahead of the government’s closely watched non-farm payrolls report due on Friday.
The Institute for Supply Management’s non-manufacturing purchasing managers’ index edged up to 54.1 in July from 54.0 in June, although it came in below economists’ forecast of 54.5. A reading above 50 still indicates expansion.
Investors remain focused on inflation and the Federal Reserve’s next move, with the market now pricing a 54.9% chance of a rate hike at the September meeting, down from 58.3% a week earlier.
Minneapolis Fed President Neel Kashkari said in an interview with CNBC that he believed it was time to begin slowly raising interest rates, while Federal Reserve Board Governor Lisa Cook and San Francisco Fed President Mary Daly were also scheduled to speak later in the day.
