U.S. stocks were a mixed bag by midday Wednesday, with the Dow and S&P 500 grinding higher while the Nasdaq 100 slipped and small caps lagged. The culprit? A potent cocktail of rising oil prices, fresh tariff concerns, and a cautious wait for the first batch of "Magnificent Seven" earnings.
Oil prices climbed as the U.S. carried out its 11th consecutive night of strikes on Iran, broadening its targets and stoking fears over the flow of crude through the Strait of Hormuz. West Texas Intermediate crude – as tracked by the United States Oil Fund (USO) – rose about 2.2%, trading near $88 a barrel.
The energy-driven inflation impulse rippled into rates. The 10-year Treasury yield pushed up about 2 basis points to 4.65%, while the 30-year yield climbed to 5.14%. Traders now see roughly a 24% chance of a July rate hike and about a 69% probability of at least a quarter-point increase by September, according to CME FedWatch.
The S&P 500 added 0.2% to 7,522.54, building on Tuesday's 0.9% advance, while the Dow Jones Industrial Average rose about 0.3%, or roughly 160 points, supported by industrial and materials names. The Nasdaq 100 slipped about 0.4% as a semiconductor bounce faded and megacap tech softened. Alphabet Inc. (GOOGL) edged up 0.3% while Tesla Inc. (TSLA) slipped 0.5% ahead of their after-the-close results. The small-cap Russell 2000 lagged, falling about 0.7% as higher yields weighed on rate-sensitive names.
Gold pushed higher on safe-haven demand, rising about 1.9% to trade near $4,150 an ounce, its highest level since July 7, as investors tracked the Middle East conflict and looked ahead to next week's Federal Reserve meeting.
Wednesday's Performance In Major US Indices
According to market data:
- The Vanguard S&P 500 ETF (VOO) gained 0.2%.
- The SPDR Dow Jones Industrial Average ETF Trust (DIA) rose 0.3%.
- The Invesco QQQ Trust (QQQ) slid 0.4%.
- The iShares Russell 2000 ETF (IWM) slid 0.7%.
Super Micro Computer Rallies 25%, Enterprise Software Cracks
Sector leadership tilted defensive and cyclical. The Utilities Select Sector SPDR Fund (XLU) led the S&P 500 with a gain of about 1.6%, followed by the Materials Select Sector SPDR Fund (XLB), up roughly 1.4%, and the Energy Select Sector SPDR Fund (XLE), up about 0.9% alongside firmer crude.
Beneath the sector picture, the day's biggest single-stock was Super Micro Computer Inc. (SMCI), which rocketed about 26%. The AI server maker said backlog rose to record levels, with more than $60 billion in new orders received during its fiscal fourth quarter, and guided fourth-quarter gross margin to a range of 15% to 17%, sharply above its prior 8.2% to 8.4% outlook. The read-through lifted rival Dell Technologies Inc. (DELL), which climbed about 10% on expectations of similar demand strength when it reports next month.
Advanced Micro Devices Inc. (AMD) added about 2.3% after unveiling a deal under which Anthropic committed to buy up to two gigawatts of AMD GPUs while AMD invests $5 billion in the AI lab.
Industrials provided the other bright spot. Westinghouse Air Brake Technologies Corp. (WAB) jumped about 12% after the rail-technology company posted Q2 adjusted EPS of $2.76 versus $2.63 expected and revenue of $3.18 billion, and lifted full-year guidance to adjusted EPS of $10.60 to $10.90 on a record $30.9 billion backlog. Penske Automotive Group, Inc. (PAG) rallied about 11% following its second-quarter results.
Biotech Arrowhead Pharmaceuticals Inc. (ARWR) surged about 22% after its Phase 3 SHASTA-3 and SHASTA-4 studies met their primary and secondary endpoints.
The pain was concentrated in enterprise software. Pegasystems Inc. (PEGA) tumbled about 15% after second-quarter adjusted EPS of $0.35 and revenue of $420.7 million missed Street estimates of $0.43 and $428.4 million, with management warning that "unprecedented changes in the AI market" have led enterprise customers to delay purchasing decisions. That warning rippled across automation peers, dragging UiPath Inc. (PATH) down about 12% in sympathy, a move that compounded a recent analyst downgrade to Hold on AI-commoditization risk.
GE Vernova Inc. (GEV) slid about 7% after Q2 EPS of $2.41 badly missed the $3.04 consensus even as revenue beat at $9.34 billion and the power giant raised its full-year revenue forecast; management flagged a $100 million to $200 million tariff-related cost headwind.
Elsewhere, Reddit Inc. (RDDT) fell about 9% and Klaviyo Inc. (KVYO) dropped about 7%. Among the morning's other earnings, Philip Morris International Inc. (PM) rose about 4%.
Investors now await after-the-close results from Alphabet, Tesla and International Business Machines Corp. (IBM) for the next read on the AI trade.
