Summary
- Indexes mixed: Dow up 0.5%, S&P 500 flat, Nasdaq down 0.3%
- Super Micro surges after strong business update
- AT&T jumps after strong wireless subscriber additions in Q2
- Alphabet, Tesla to report Q2 results after the bell
(Reuters) – U.S. stock indexes were mixed on Wednesday, as weakness in chip shares soured sentiment ahead of the first batch of Big Tech earnings that could decide the durability of Wall Street’s AI-driven rally.
After months of gains that pulled the major indexes up from their March lows, momentum has faltered as volatility in heavyweight semiconductor shares has dented risk appetite.
Investors are now looking to second-quarter results from Alphabet and Tesla the first of the so-called “Magnificent Seven” megacap companies to report after the bell for fresh evidence that these companies’ multibillion-dollar investments in AI are paying off.
Alphabet will be under particular scrutiny after a delay in the launch of a model central to its AI ambitions intensified concerns. Its shares were flat.
“Investors are going to take sort of a wait-and-see attitude before deciding whether the trend is decidedly down or whether yesterday’s ‘buy the dip’ has some sustainability,” said Sam Stovall, chief investment strategist at CFRA Research.
“The magnitude of capex spending will be central to both Tesla and Alphabet.”
Texas Instruments, also due to report after the close, ticked 0.3% lower, tracking broader weakness across semiconductor stocks.
The Philadelphia SE Semiconductor index was little changed. The gauge has closed lower five times in the previous ten sessions, underscoring shaky sentiment in the chip sector.
The heavy earnings slate sets markets up for a potentially choppy week, with geopolitical risks adding to the caution.
Information technology led sector-wise losses and muted gains elsewhere, even as materials and utilities sectors gained 1.6% and 1.2%, respectively.
Strength in materials and industrials kept the blue-chip Dow afloat.
Fighting in the Middle East remained in focus as threats to shipping by Yemen’s Iran-backed Houthi militia, alongside a widening conflict, disrupted two of the world’s most important energy chokepoints.
U.S. Secretary of State Marco Rubio said Washington was still willing to negotiate an end to the Iran crisis, but that Tehran was “not serious” about talks.
Oil prices climbed to near six-week highs, complicating the outlook for central bankers as inflation concerns return to the spotlight.
The Federal Reserve is expected to keep interest rates steady for the rest of 2026, according to the median forecast in a Reuters poll of economists, though respondents said the risk of a rate hike remained elevated.
Traders are pricing in a nearly 72% chance the Fed leaves rates unchanged at next week’s meeting, CME Group’s FedWatch tool showed.
At 9:58 a.m. ET, the Dow Jones Industrial Average rose 238.09 points, or 0.46%, to 52,462.73, the S&P 500 gained 2.28 points, or 0.03%, to 7,511.48 and the Nasdaq Composite lost 65.06 points, or 0.25%, to 25,772.14.
Among movers, AT&T rose 3.8% after the telecom firm added more wireless subscribers than expected in the second quarter.
Super Micro Computer surged 22.4%, as the AI server maker said it had secured more than $60 billion in new fourth-quarter orders and now expects gross margin to exceed its previous gross-margin forecast.
Advancing issues outnumbered decliners by a 1.25-to-1 ratio on the NYSE and by a 1.29-to-1 ratio on the Nasdaq.
The S&P 500 posted 10 new 52-week highs and no new lows, while the Nasdaq Composite recorded 27 new highs and 44 new lows.
Reporting by Ragini Mathur and Avinash P in Bengaluru; Editing by Amanda Cooper, Joyjeet Das and Maju Samuel
