Wall Street Highlights: S&P 500, Nasdaq Edge Lower As Rate Hike Rumbles Offset Nvidia's Rally

SpaceX shares sank after reporting higher-than-expected AI-related outlays and ahead of a pending share unlock.

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The S&P 500 fell 0.2% after closing at a record high a day earlier. The tech-heavy Nasdaq 100 fell 0.8%.
(Photo: Bloomberg News)
US stocks closed little changed on Wednesday, erasing an earlier climb, after Minneapolis Fed President Neel Kashkari's comment that it's time for the central bank to start slowly raising rates. Megacap Nvidia Corp. extended its rally to a fifth day, boosted by confidence in artificial-intelligence related spending. The stock contributed the most to the S&P 500 Index on a points basis Wednesday.

The S&P 500 fell 0.2% after closing at a record high a day earlier. The tech-heavy Nasdaq 100 fell 0.8%. Alphabet Inc. dragged on the index, dropping 4% after Google announced some of its most prominent AI veterans were leaving the company.

"It's a combination of the market digesting its recent sharp advance and concerns surrounding the resumption of 'sell the news' to positive earnings reports that we're seeing out of AMD and SpaceX," said Matt Maley, chief market strategist at Miller Tabak + Co. "Today's reversal will have to become a much bigger decline before it raises any warning flags."

SpaceX shares sank after reporting higher-than-expected AI-related outlays and ahead of a pending share unlock. Advanced Micro Devices Inc. shed 7.0% after giving a sales outlook that underwhelmed markets even though it was higher than consensus estimates, a sign shareholders expected more of a return from the global expansion of AI data centers.

"AI-related results and commentary have sparked some profit taking," said Colin Cieszynski, chief market strategist and portfolio manager at SIA Wealth Management Inc.

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Kashkari, who dissented from the Fed's decision to hold rates steady last week, said on CNBC that he's not calling for a big jump in rates and doesn't want to slow the economy but wants to bring inflation down to the Fed's 2% goal.

Meanwhile, West Texas Intermediate crude slipped 1% to around $75 per barrel, after Iran's foreign ministry announced it had agreed with Oman on the geopolitical coordinates of the proposed shipping route through the Strait of Hormuz.

President Donald Trump told reporters in Los Angeles on Tuesday night that talks with Iran were "moving along very nicely."

After the bell, watch for reports from memory chipmakers Sandisk Corp. and Western Digital Corp., both big contributors to the benchmark index's gains this year.

SpaceX shares fell about 14% to a new low of $108.27 as investors evaluated results and braced for the next potential hit when $101 billion worth of stock becomes available for trading on Thursday. The options market had been expecting SpaceX stock to move like a meme-stock after earnings, more than 14% in either direction.

"The company has reverberations across the whole economy," Carnegie Investment Counsel Research Director Greg Halter said. He cited SpaceX's data centers in addition to its space endeavors and rocket launches.

Sandisk declined in post-market trading after its results. The company had been expected to report soaring profit and an optimistic outlook after tech giants including Amazon.com Inc. and Microsoft Corp. last week pledged to keep spending heavily on AI computing infrastructure. The volatile stock was the best performer in the S&P 500 this year, soaring 501% through Tuesday's close.

In other earnings news, Eli Lilly & Co. rallied 4.9% after boosting its 2026 sales guidance as the obesity drug boom shows no sign of slowing.

Of the 372 S&P 500 companies to have reported so far through Tuesday, 87% have beaten analysts' earnings-per-share forecasts, while 69% of companies have positively surprised on sales.

Wolfe Research strategist Chris Senyek in a Wednesday note questioned whether margins may have peaked for this cycle, citing 1.2 percentage points of margin expansion since the prior quarter for the median S&P 500 company. "The compounding effect of strong company fundamentals, aided by AI, has pushed margins higher," he said, adding that there may be "continued expansion over the remainder of the year as the US economy remains strong."

In Wednesday economic news, the US service sector expanded at a steady pace in July, as new orders growth accelerated and a measure of business activity climbed to a five-month high.

In other tech news, Meta Platforms Inc.'s former chief AI scientist Yann LeCun is joining a new venture firm to invest in AI startups, and the flagship fund at Ken Griffin's Citadel jumped 6% in July, after the firm bought a discounted portfolio of AI stocks from troubled hedge fund Situational Awareness.

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Sectors in Focus

  • Travel and entertainment, after Booking Holdings Inc. topped estimates thanks to strong demand and Walt Disney Co.'s beat was driven by soaring income from its entertainment division and California and Florida theme park resilience.
  • Telecom, like wireless carriers and cell-tower REITs, fell after SpaceX outlined plans to compete directly with the largest mobile phone carriers in the US by complementing its satellite-based internet service with land-based infrastructure.
  • Solar stocks, like First Solar Inc., with news Trump was readying tariffs and minimum prices on imported polysilicon in a bid to boost domestic production of the material, semiconductors and solar panels.
  • Big banks, as the benchmark KBW Bank Index hit a record, boosted by optimism about the economy.

(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)

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