US STOCKS-Dow closes at record on Mideast optimism; SpaceX, AMD drag Nasdaq

The Dow closed at a record high on Wednesday, driven by optimism over a potential peace deal with Iran, while the Nasdaq saw its first decline in five sessions.

The Dow closed at a record on Wednesday on ‌signs ​of progress for a peace deal with Iran, while the Nasdaq saw its first decline in five sessions as SpaceX and AMD stumbled following their quarterly earnings. A proposed deal between Iran and Oman would give Tehran control over ships entering the Gulf through the Strait of Hormuz, ‌a senior Iranian source and two regional officials told Reuters, in one of the biggest concessions yet to Iran.

Stocks rallied to start the week, with the Dow and S&P 500 closing at records on Tuesday, as oil prices and U.S. Treasury yields dropped on hopes peace talks could lead to a deal, easing inflation pressures and lowering expectations for a rate hike from the Federal Reserve. "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?" According to preliminary data, the S&P 500 lost 13.33 points, or 0.17%, to end at 7,723.19 points, while the Nasdaq Composite lost 225.32 points, or 0.85%, to 26,359.67. The Dow Jones Industrial Average rose 264.04 points, or 0.49%, to 54,349.92.

SPACEX SHARES TUMBLE ON AI SPENDING CONCERNS Elon Musk-led SpaceX's revenue nearly doubled and operating losses ⁠narrowed in its ​first earnings report since going public, fueled by its ⁠booming Starlink satellite communications and AI businesses, but shares tumbled on concerns about how long the company could maintain spending on AI-related investments such as data centers. Shares could face additional pressure from the expiry of the stock's post-IPO lock-up period starting ⁠on Thursday. Advanced Micro Devices forecast quarterly revenue above estimates, reflecting strong AI demand. However, shares dropped as investors look for greater evidence the massive AI spending will result in faster growth. A gain in Amgen helped buoy the ​Dow, as second-quarter sales for the drugmaker rose 9%. Rival Eli Lilly also advanced after raising its full-year revenue forecast and the S&P 500 healthcare closed as one of the ⁠best-performing sectors on the session. Also helping to boost the Dow was a rise in Disney shares after beating third-quarter profit expectations.

ADP PRIVATE PAYROLLS GROWTH SLOWS On the data front, U.S. private payrolls growth slowed in July, as per the ADP national employment report. ⁠The ​data was the second in a string of reports on the labor market this week before Friday's government payrolls report. Separately, the Institute for Supply Management said its nonmanufacturing purchasing managers index inched up to 54.1 last month from 54.0 in June, below the 54.5 estimate of economists polled by Reuters but above the 50 threshold that signals growth. Data has largely reflected a stable labor market, ⁠but the war with Iran that began at the end of February has kept concerns about price pressures and the Fed's response to it as a primary concern among investors. Minneapolis Fed President Neel ⁠Kashkari said in an interview with CNBC that he ⁠believed now is the time to start slowly moving interest rates higher. Federal Reserve Board Governor Lisa Cook and San Francisco Fed President Mary Daly are scheduled to speak later in the day. Expectations for a rate hike from the central bank at its September meeting have dipped to 54.9%, ‌according to CME FedWatch, down from ‌58.3% a week ago.