Stocks cooled after record highs
US stocks moved modestly higher Wednesday after a sharp rally, with investors weighing earnings from SpaceX and AMD against fresh comments from President Trump that a deal to reopen the Strait of Hormuz could come soon.
The Dow Jones Industrial Average climbed 0.8%, while the S&P 500 pared gains to 0.1%. The Nasdaq Composite slipped into negative territory as tech shares lost momentum.
The move followed record closes for the major indexes. Global markets had started the day stronger after gains in Asia, where South Korea’s KOSPI rose almost 4%.
Hormuz headlines pushed oil lower again
Oil prices fell for a third straight session after Trump said the US could be nearing a deal with Iran to reopen the Strait of Hormuz.
“It could happen. Tomorrow or the next day,” Trump said, according to Bloomberg.
Brent crude slipped toward $78 per barrel, while US benchmark WTI fell to around $75 per barrel.
Qatar said Tuesday that a proposal had been drafted between the US and Iran to reopen Hormuz, a critical waterway for roughly one-fifth of global oil. Iran is also reportedly considering allowing European countries to remove mines from the strait.
The oil market has been trading directly off Hormuz headlines. Any sign of a reopening deal reduces the immediate supply premium that built during the conflict.
SpaceX fell after its first public earnings report
SpaceX shares dropped 8% after the company’s first report as a public company.
The company beat second-quarter earnings expectations, but investors focused on the size of its AI infrastructure spending. The report showed SpaceX is moving deeper into AI infrastructure, with heavy capital spending tied to data-center expansion.
The stock faces another near-term pressure point. About 20% of SpaceX shares are set to unlock for trading this week, adding potential supply to the market.
SpaceX had rallied more than 9% Tuesday for its best session since its June IPO, but the earnings report shifted attention back to spending and dilution risk.
AMD beat, but not by enough for the market
AMD shares also fell despite reporting an earnings beat and a strong outlook.
The reaction showed how high expectations have become for AI-linked chip companies. Analysts were looking for “exceptional” results, not merely “excellent” ones.
AMD remains tied closely to the AI infrastructure buildout, but investors are becoming more selective. Earnings beats are no longer enough when valuations already assume strong growth.
Treasury yields are flashing a Fed credibility problem
The bond market is sending a different message from stocks.
After the Federal Reserve held rates unchanged in July, the 30-year Treasury yield climbed above 5.2%, reaching its highest level since 2007 before easing.
BNP Paribas strategists said rising term premiums show investors are questioning the Fed’s credibility. Term premiums represent the extra yield investors demand to hold long-duration bonds when future inflation, growth and policy are uncertain.
Markets are still pricing in rate hikes, but BNP said investors may not believe the Fed is prepared to raise rates enough to bring inflation back to its 2% target.
The strategists said the market may need to price in three or four more hikes before term premiums start to decline.
The market is balancing oil relief against tech fatigue
Wednesday’s trade had two clear sides.
Lower oil helped the macro picture as Hormuz reopening talks gained momentum. At the same time, tech weakness kept the Nasdaq under pressure as investors pushed back on AI spending, chip expectations and fresh share supply from SpaceX.
The broader market is still holding near records, but the leadership is less clean. The Dow benefited from oil relief and broader risk appetite. The Nasdaq showed that AI and tech stocks are still being held to a much higher bar.
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