U.S. stock indexes finished mixed on Wednesday as investors weighed upbeat company reports against softer economic signals and a more hawkish Federal Reserve tone. The S&P 500 closed down 0.17% after pulling back from a record, the Dow Jones Industrial Average gained 0.49% to a new all-time high, and the Nasdaq 100 fell 0.83% after turning lower from a one-month high.
Pressure in semiconductors drove part of the decline: Advanced Micro Devices slid more than 7% after its third-quarter sales forecast missed expectations, dragging chip peers with it. In contrast, strong earnings helped support select names, including Booking Holdings and Amgen, while SpaceX dropped more than 13% on higher-than-expected spending tied to its artificial intelligence effort.
Key takeaways
- S&P 500 fell 0.17%: The index retreated from record levels as growth-sensitive stocks lost momentum.
- Chip stocks weighed on the Nasdaq 100: A weaker-than-expected third-quarter outlook from Advanced Micro Devices spilled into the semiconductor sector.
- Fed messaging stayed a headwind: Comments from Fed officials reinforced the view that tighter policy may be needed to bring inflation down.
- Earnings power supported pockets of the market: Results from Booking Holdings and Amgen provided lift for consumer and healthcare-related shares.
- Rates and housing data added uncertainty: ADP employment and ISM services softness, alongside higher mortgage rates, influenced the bond and equity outlook.
What drove the move
Wednesday’s index performance reflected a tug-of-war between earnings and macro signals. While several companies posted results that beat expectations, the broader market struggled to hold gains as investors assessed the path of interest rates.
In technology, Advanced Micro Devices fell more than 7% after its third-quarter sales forecast came in below what investors had expected despite what was described as healthy underlying demand. The selloff spread across the chip group, with multiple major peers also closing lower by more than 2% to 3%.
Other corporate developments added to the dispersion. Booking Holdings rose more than 6% after reporting better-than-expected Q2 gross bookings, while Amgen climbed more than 3% following stronger-than-expected Q2 earnings per share. Meanwhile, SpaceX dropped by more than 13% after disclosing higher-than-expected spending on its artificial intelligence business, even though it reported Q2 earnings that beat expectations.
On the economic front, U.S. data came in slightly weaker than expected. The July ADP employment change increased by 44,000, below expectations of 65,000. The July ISM services index rose 0.1 to 54.1, but was also below consensus of 54.5. Price pressures remained a focal point: the ISM services price paid sub-index rose 2.6 to 70.3 against expectations for a decline, indicating services inflation could be stickier than investors prefer.
Market reaction: rates, oil, and credit-sensitive signals
Bond-related dynamics were another key element shaping Wednesday’s trading. September 10-year Treasury note futures rose modestly, with the 10-year yield finishing up 0.6 basis points at 4.619%. The session’s rates direction reflected competing forces: weaker employment and ISM readings can support a more dovish view, but hawkish Fed commentary and firm services pricing can counter that.
Fed officials’ remarks weighed on both stocks and bonds. Kansas City Fed President Jeff Schmid said inflation would require tighter policy to reach the Fed’s 2% objective, and Minneapolis Fed President Neel Kashkari argued the Fed should begin raising interest rates incrementally now to curb inflation that remains too high.
Housing and mortgage data also added to the pressure. Mortgage applications fell in the week ended July 31, with both purchase and refinancing sub-indexes down. The average 30-year fixed-rate mortgage rose by 5 basis points to 6.81%, reaching a one-year high compared with 6.76% the prior week.
Oil prices moved lower, with September WTI crude futures falling to a three-week low. Reports indicated the U.S., Iran, and Oman were nearing an interim agreement to reopen the Strait of Hormuz, which weighed on crude. Initial gains tied to warnings from the Houthis about escalating attacks on Saudi oil tankers in the northern Red Sea faded after Saudi Aramco said Houthi threats had not yet affected Saudi crude exports through the Red Sea and that contingency steps were underway.
Big picture: earnings expectations and what’s next
Despite the mixed macro backdrop, earnings expectations continued to provide a supportive framework for equities. Bloomberg Intelligence data, as cited in the original market coverage, pointed to the likelihood of a mid-20s percentage rise in second-quarter earnings, with AI spending expected to account for much of the contribution to sector growth—particularly from AI infrastructure names. Early reporting also appeared encouraging, with the coverage noting that the majority of S&P 500 companies that had reported so far beat estimates.
For investors focused on the rate path, attention remained on the probability of additional Fed tightening. Markets were discounting a 55% chance of a 25-basis-point hike at the next FOMC meeting on September 15–16, according to the original coverage.
Looking ahead, traders will likely watch incoming data for signals on labor, services inflation, and the broader inflation trend that can influence Fed expectations. The next major catalysts include continued earnings reports and upcoming central bank communications, alongside scheduled macro releases that could shift expectations for rates.
