S&P 500 and Dow hit record highs as SpaceX shares tumble despite strong earnings
US stocks have opened higher as investors appeared hopeful that a deal could ease tensions in the Middle East.
The S&P 500 and the Dow are trading at all-time highs as hopes of a Middle East peace breakthrough offset the slide in shares of SpaceX and AMD after the upbeat forecasts issued by the companies failed to impress investors.
Elon Musk-led SpaceX’s revenue nearly doubled and operating losses narrowed in its first earnings report since going public, fuelled by its booming Starlink satellite communications and AI businesses.
But the rocket company’s shares slid 12.5 per cent in early trading after executives flagged the spending spree underpinning its lofty ambitions was far from over.
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By continuing you agree to our Terms and Privacy Policy.Shares could face additional pressure from the expiry of the stock’s post-IPO lock-up period starting on Thursday.
Mr Musk’s other company Tesla slipped 1.6 per cent.
“This is the culmination of the story of this entire earnings season. SpaceX beat analysts’ expectations on revenue but spending on AI is getting out of hand, with no signs of slowing down anytime soon,” said Nic Puckrin, cross-asset analyst and founder of Coin Bureau.
Advanced Micro Devices forecast quarterly revenue above estimates, reflecting strong AI demand.
However, shares slipped 6.5 per cent, suggesting investors were looking for a stronger outlook to justify the stock’s 142 per cent jump this year.
Rival Nvidia’s shares, which have lagged AMD this year, rose 3.4 per cent, also underpinned by SpaceX’s plans to use the company’s hardware exclusively to build its data centres.
Most megacap stocks gained, with Microsoft and Alphabet up about 1.0 per cent each.
Seven of the 11 S&P sectors were trading higher, with healthcare leading gains with a 1.9 per cent rise.
Utilities lagged with a near 1.0 per cent fall.
Wednesday’s moves built on Wall Street’s rally spanning the past few sessions that took the benchmark S&P 500 and the blue-chip Dow to record highs as confidence in AI-related stocks flourished.
In early trading on Thursday, the Dow Jones Industrial Average rose 450.80 points, or 0.83 per cent, to 54,536.68, the S&P 500 gained 46.98 points, or 0.61 per cent, to 7,783.50 and the Nasdaq Composite gained 109.43 points, or 0.41 per cent, to 26,694.42, hitting its highest in over a month.
Investors also weighed a slew of earnings from other sectors.
Drug maker Eli Lilly was up 7.3 per cent after raising its full-year revenue forecast while Disney rose 2.9 per cent after beating third-quarter profit expectations.
Arista Networks jumped 7.3 per cent as the networking equipment maker forecast third-quarter revenue above estimates.
Uber lost 5.5 per cent after forecasting current-quarter adjusted earnings below estimates.
On the data front, US private payrolls growth slowed in July as per the ADP national employment report.
The bigger focus will be on the official non-farm payrolls figures on Friday.
Data has broadly reflected robust economic performance but, with Middle East tensions keeping energy costs elevated and the Federal Reserve offering no forecasts on monetary policy, uncertainty persists.
Minneapolis Fed president Neel Kashkari in an interview with CNBC said he believed now is the time to start slowly moving interest rates higher.
At least two more top Fed officials are expected to speak later in the day.
Advancing issues outnumbered decliners by a 1.26-to-1 ratio on the NYSE and by a 1.13-to-1 ratio on the Nasdaq.
The S&P 500 posted 22 new 52-week highs and one new low while the Nasdaq Composite recorded 52 new highs and 25 new lows.
