Contracts tied to the S&P 500 and Dow were modestly higher on Wednesday, buoyed by hopes for progress on Middle East diplomacy, while Nasdaq contracts lagged amid mixed reactions to earnings and guidance from high-profile technology firms.
SpaceX, reporting publicly for the first time since its initial offering, said revenue nearly doubled and operating losses narrowed, driven by strength in its Starlink satellite communications and artificial intelligence operations. Despite those figures, the company’s shares fell roughly 10% in premarket trading after executives warned that the elevated level of spending supporting their ambitions will continue. The stock also faces potential added selling pressure as the post-IPO lock-up period for shares begins to lapse starting on Thursday.
Tesla edged down 0.8% in the session, reflecting a spillover from developments tied to its chief executive’s other company. Advanced Micro Devices provided a quarterly revenue forecast above estimates, citing strong demand tied to AI. Still, AMD shares dropped 8.1% in reaction to the report, suggesting investors expected a more robust outlook given the stock’s 142% rise so far this year.
Nvidia’s shares rose 1.9% on the day, supported in part by SpaceX’s decision to use that company’s hardware exclusively in building its data centers. Other chipmakers did not fare as well: Intel and Micron each fell about 1.5%. Large-cap technology names Microsoft and Alphabet were largely unchanged as markets paused following a recent run that pushed the S&P 500 and the Dow to record levels.
At 05:06 a.m. ET, Dow E-minis were up 116 points, or 0.21%, while S&P 500 E-minis were higher by 19.75 points, or 0.25%. Nasdaq 100 E-minis were down 20.5 points, or 0.07%.
Telecommunications shares came under pressure after SpaceX outlined plans to build full-scale mobile service. Verizon and AT&T each fell by more than 2%, while T-Mobile slipped 0.8%.
Beyond corporate news, market participants are watching several economic releases due before and during the trading day. A private national employment survey is scheduled for release at 8:15 a.m. ET and may offer early insight into the jobs picture for July ahead of the official non-farm payrolls figures on Friday. A services sector activity survey for the previous month is due at 10 a.m. ET.
Federal Reserve commentary is also in focus. Kansas City Fed President Jeff Schmid, a non-voting member of the Federal Open Market Committee, said late on Tuesday that some sort of monetary policy tightening is needed to bring what he called "too high" inflation back to the 2% target. Remarks from Governor Lisa Cook and San Francisco Fed President Mary Daly are expected to be scrutinized for additional perspective on interest-rate policy. Traders, via the CME Group’s FedWatch Tool, are pricing in a 58.4% chance of a rate hike in September.
Corporate earnings due before the open include reports from Uber, Eli Lilly, Honeywell and Kraft Heinz. The market’s recent strength has been tempered by persistent uncertainty over energy costs, tied to Middle East tensions, and the Fed’s reluctance to provide explicit forward guidance on monetary policy.
Key points
- S&P 500 and Dow futures rose modestly on hopes of a diplomatic breakthrough in the Middle East, while Nasdaq futures fell slightly.
- SpaceX reported rapidly increasing revenue and smaller operating losses but saw a significant premarket stock drop after executives signaled continued high spending; post-IPO lock-up expirations begin Thursday.
- AMD projected quarterly revenue above estimates yet shares declined sharply; Nvidia gained amid SpaceX’s hardware plans. Telecom firms fell following SpaceX’s mobile service ambitions.
Risks and uncertainties
- Ongoing Middle East tensions could keep energy prices elevated, which may weigh on broader market sentiment and sectors sensitive to energy costs, such as industrials and transportation.
- Monetary policy uncertainty remains, with Fed officials’ remarks and markets pricing in a material chance of a September rate increase - a factor that could influence interest-rate sensitive sectors like real estate and financials.
- Concentration of investor attention on tech earnings and large-cap performance introduces volatility risk for the Nasdaq and semiconductor-related stocks.