Dow flat as S&P 500, Nasdaq slip before Big Tech earnings, oil climbs

US stocks closed mixed on Wednesday as rising oil prices and caution ahead of a key batch of corporate earnings weighed on investor sentiment.

Investors also continued to monitor developments in the Middle East and reassess expectations for Federal Reserve interest rates.

The S&P 500 fell 0.1%, while the Nasdaq Composite declined 0.6%.

The Dow Jones Industrial Average finished little changed, ending the session down 5 points.

Markets remained focused on upcoming earnings from major technology companies, with Alphabet and Tesla leading a closely watched slate of reports expected to provide fresh insight into artificial intelligence spending and corporate technology demand.

Big Tech earnings dominate investor focus

Investor attention centered on second-quarter earnings from Alphabet and Tesla, the first of the Magnificent Seven companies to report this earnings season.

Market participants are looking for evidence that continued multibillion-dollar investments in artificial intelligence are translating into sustainable growth and improved financial performance.

Technology companies including ServiceNow, International Business Machines and Texas Instruments were also scheduled to report, with investors expected to monitor commentary on AI spending, cloud demand, enterprise technology budgets and second-half business outlooks.

The technology sector delivered a mixed performance during the session.

Semiconductor shares recovered from early losses, with the Philadelphia Semiconductor Index ending higher and extending its rebound after entering bear market territory last week.

Software stocks, however, remained under pressure as investors became more selective within the AI sector after months of strong gains.

Super Micro Computer surged 21% after the AI server maker projected stronger-than-expected fiscal fourth-quarter margins and disclosed that it secured more than $60 billion in new orders during the quarter.

The update also lifted shares of AI server peers Dell Technologies and Hewlett Packard Enterprise.

Oil surge fuels inflation and rate concerns

Energy markets remained a key driver of trading sentiment as Brent crude climbed roughly 3% to trade above $94 per barrel after briefly topping $95, while West Texas Intermediate crude rose about 3% to above $86 per barrel.

Both benchmarks recorded their highest settlements since June 11.

Oil prices continued to rise following the 11th consecutive round of US strikes against Iran and ongoing threats to shipping in the Red Sea and the Strait of Hormuz.

Higher energy prices have renewed concerns that inflation could remain elevated, potentially complicating the Federal Reserve's policy outlook.

Market expectations for additional interest rate increases have also shifted higher.

Fed funds futures implied a 31% probability of a rate hike this month, up sharply from 10% a week earlier.

Traders also priced in a 75% chance of at least a quarter-point rate increase in September.

A separate Reuters poll of economists indicated that the Federal Reserve is expected to keep interest rates unchanged for the remainder of 2026, although respondents noted that the risk of future rate hikes remains elevated.

Corporate earnings produce mixed stock moves

Outside the technology sector, several companies posted notable share price moves following earnings updates.

AT&T gained about 2% after reporting stronger-than-expected second-quarter wireless subscriber growth.

Philip Morris International also advanced after stronger cigarette demand helped the company exceed quarterly earnings estimates.

GE Vernova, however, fell 8% after its second-quarter earnings missed market expectations.

With geopolitical risks remaining elevated and earnings season accelerating, investors continue to assess whether strong corporate results and sustained AI investment can support current equity valuations despite higher oil prices, inflation concerns and uncertainty surrounding future monetary policy.