Dow rises as SpaceX, AMD slide despite earnings, Iran hopes lift stocks

US stocks opened higher on Wednesday as investors balanced optimism over a potential diplomatic breakthrough in the Middle East against disappointing market reactions to earnings from SpaceX and Advanced Micro Devices (AMD).

The Dow Jones Industrial Average rose about 0.76%, while the S&P 500 gained 0.59%.

The Nasdaq Composite added roughly 0.41%, following a strong rally in the previous session that sent both the Dow and the S&P 500 to record closing highs.

Investor sentiment remained supported by hopes that negotiations between the United States and Iran could lead to the reopening of the Strait of Hormuz, easing concerns over global energy supplies.

Oil prices, which had dropped sharply on Tuesday, recovered modestly on Wednesday, with West Texas Intermediate crude rising about 0.3% to around $76 per barrel and Brent crude climbing roughly 1% to about $80 per barrel.

SpaceX and AMD fall despite upbeat earnings

The latest round of corporate earnings produced mixed reactions, particularly among AI-related companies.

SpaceX shares tumbled about 12% in trading after the company released its first quarterly earnings report since going public in June.

Revenue nearly doubled during the quarter, and operating losses narrowed, supported by growth in its Starlink satellite communications business and artificial intelligence operations.

However, investors focused on the company's continued heavy investment plans.

Capital expenditures increased sixfold to $18.4 billion during the second quarter, with most of the spending directed toward AI infrastructure.

The stock also faced additional pressure ahead of the expiration of its post-initial public offering lock-up period, which begins on Thursday.

Shares of Tesla, Elon Musk's other publicly traded company, slipped about 0.8% in trading.

AMD also traded lower despite issuing quarterly revenue guidance above analysts' expectations, reflecting continued demand for AI products.

The stock fell 4.5% in trading as investors appeared to expect an even stronger outlook following the company's sharp rally this year.

Elsewhere in the semiconductor sector, Nvidia gained about 3.5%, supported by SpaceX's plan to use Nvidia hardware exclusively for its data centers.

Intel declined roughly 1.5%.

Earnings lift select sectors

Outside the technology sector, several companies posted earnings that were well received by investors.

Eli Lilly climbed about 8.6% after raising its full-year revenue forecast.

Disney gained more than 2.4% after reporting fiscal third-quarter profit that exceeded Wall Street expectations.

Uber, however, fell about 4.8% after issuing current-quarter adjusted earnings guidance below expectations.

Alphabet added around 1% in trading.

Economic data and Fed outlook remain in focus

Investors also assessed fresh economic data ahead of Friday's closely watched nonfarm payrolls report.

The ADP National Employment Report showed the US economy added 44,000 private-sector jobs in July, below economists' expectations of 70,000.

The weaker reading shifted attention to the official labor market data later this week for further clues on the strength of the economy.

Federal Reserve policy remains another key focus for investors.

Minneapolis Fed President Neel Kashkari indicated that he believes it is time to begin gradually raising interest rates, while speeches from Governor Lisa Cook and San Francisco Fed President Mary Daly are expected to provide additional insight into the central bank's outlook.

According to CME FedWatch data, traders are pricing in a 58.4% probability of a Federal Reserve rate increase at its September meeting.