Wall Street was set for a mixed opening on Wednesday. Futures tracking the Dow Jones Industrial Average and S&P 500 moved slightly higher. Nasdaq futures were lower as investors reacted negatively to the latest outlooks from SpaceX and Advanced Micro Devices (AMD). Hopes of a possible breakthrough toward peace in the Middle East also helped support the Dow and S&P 500.
Dow E-minis were up 116 points, or 0.21%. S&P 500 E-minis gained 19.75 points, or 0.25%. Nasdaq 100 E-minis fell 20.5 points, or 0.07%. The moves came after the S&P 500 and Dow had recently climbed to record highs.
SpaceX reports strong revenue growth
SpaceX reported strong growth in its first earnings report since going public. The Elon Musk-led company said its revenue nearly doubled. Its operating losses also became smaller. The growth was mainly helped by its Starlink satellite internet business and its growing artificial intelligence operations. Despite the strong numbers, investors were not convinced that SpaceX's spending would slow down, according to Reuters.
SpaceX shares dropped about 10% in premarket trading. The fall came after company executives warned that the huge spending needed to support SpaceX's ambitious plans would continue. Investors are concerned that the company will have to spend heavily to build out its businesses and future projects. SpaceX shares could also face more pressure because the company's post-IPO lock-up period begins to expire on Thursday. This could allow more early investors and insiders to sell their shares.
Elon Musk's other major company, Tesla, also moved lower. Tesla shares were down about 0.8% in premarket trading.
AMD gives a strong forecast, but shares still fall
{{/usCountry}}Elon Musk's other major company, Tesla, also moved lower. Tesla shares were down about 0.8% in premarket trading.
AMD gives a strong forecast, but shares still fall
{{/usCountry}}Chipmaker AMD forecast quarterly revenue above Wall Street expectations. The company is benefiting from strong demand for chips used in artificial intelligence. However, investors wanted an even stronger outlook.
Also read: SpaceX rocket thought to have crashed into Moon in unintentional collision: What happened?
AMD shares dropped about 8.1% in premarket trading. The reaction was especially strong because AMD's stock has already gained about 142% this year. Investors appear to believe that a big rise in the stock price had already priced in very strong future growth, according to Reuters.
Nvidia moves higher
Nvidia shares rose about 1.9%. Nvidia has not gained as much as AMD this year. One reason for the rise was SpaceX's plan to use Nvidia hardware exclusively for building its data centers. The SpaceX connection gave Nvidia a boost even as some other chip stocks moved lower.
Other chip stocks decline
Intel and Micron shares fell about 1.5% respectively. The moves showed that investors were being selective within the chip sector rather than buying all AI-related stocks.
Shares of Microsoft and Alphabet were largely unchanged. Wall Street appeared to be taking a short break after several strong trading sessions. The recent rally had pushed both the S&P 500 and Dow to record highs.
Middle East peace hopes support markets
Hopes for progress toward a peace deal in the Middle East helped support US stocks. Investors are watching the situation closely because continued tensions in the region can keep energy prices high. Lower tensions could reduce pressure on energy costs and improve the outlook for the wider economy.
The next major focus for investors is the US labour market. A private national employment survey is due on Wednesday. The report could give investors an early idea of how the US jobs market performed in July. The data will come ahead of the government's official non-farm payrolls report on Friday.
Inflation and interest rates remain a concern
Despite the strong economic data, uncertainty remains. Middle East tensions have kept energy costs elevated, which could add to inflation pressure. At the same time, the Federal Reserve has not given investors a clear forecast for its future interest-rate decisions.
Traders see a rate hike as possible
Traders are currently pricing in a 58.4% chance of a rate hike in September, according to the CME Group's FedWatch Tool. That shows investors are taking the possibility of tighter monetary policy seriously. Higher interest rates can put pressure on stocks because they increase borrowing costs and can make bonds more attractive compared with equities.
Telecom stocks fall after SpaceX mobile plans
Telecom stocks were hit after SpaceX revealed plans to build a full-fledged mobile service. Verizon shares fell more than 2%. AT&T also dropped more than 2%. T-Mobile slipped about 0.8%. Investors are concerned that SpaceX's expansion into mobile services could increase competition for traditional telecom companies, as noted by Reuters.
Investors are also preparing for more corporate earnings reports. Uber, Eli Lilly, Honeywell and Kraft Heinz are among the companies scheduled to report results before the market opens. Their earnings and forecasts could influence trading during the session.
Wall Street's bigger picture: AI and big deals fuel a bonus boom
Wall Street is benefiting from a combination of a rising stock market, a boom in artificial intelligence and a strong year for major corporate deals. The strong market environment is also expected to translate into bigger bonuses for many finance workers.
Compensation consulting firm Johnson Associates has increased its 2026 bonus forecasts. The company raised its projections by an average of 3 percentage points from its already positive first-quarter forecast. The firm tracks pay across 21 different Wall Street job categories, as noted by Yahoo Finance.
About four out of five Wall Street jobs are expected to see bonuses increase compared with last year. The biggest gains are expected at major banks. Johnson Associates has described 2026 as the "Year of the Bank" because large banks are expected to outperform other parts of the financial industry.
Major US banks reported record first-half earnings. They benefited from unusually active financial markets. US consumers also continued to spend and borrow, supporting banking activity. This has helped create a stronger environment for bonuses.
Stock traders and IPO bankers are expected to see bonuses rise by as much as 30% from last year. M&A bankers and senior bank executives are expected to see bonus growth of around 17.5%. These jobs are benefiting from strong trading activity and a busy market for deals and new stock listings.
Bigger bonuses do not mean more Wall Street jobs
The expected increase in bonuses does not mean Wall Street banks are hiring large numbers of new workers. Employment at the six biggest Wall Street banks has barely changed over the past five years, based on regulatory filings, according to Yahoo Finance. Banks are therefore paying more to many existing employees rather than rapidly expanding their workforces.
AI could reduce the need for workers
The employment outlook could become even more challenging because of artificial intelligence. A PwC survey of around 1,000 financial services executives found that eight out of 10 expect their workforces to shrink by at least 20% over the next five years, as noted by Yahoo Finance. Companies increasingly believe AI will take over or change many tasks currently done by employees.
Wall Street is paying more but hiring less
Alan Johnson said companies are not really in hiring mode despite the rise in compensation. He said AI is already having an impact on the financial industry. Companies also expect AI to have an even bigger effect on jobs in the future. This means Wall Street could enter a period where employees who remain in high-value roles earn more, while the overall number of workers falls.