Dow closes at record on Middle East optimism; SpaceX, AMD drag Nasdaq

On August 5, the Dow Jones Industrial Average reached a record high of 54,349.06 points, buoyed by optimism surrounding a potential peace deal with Iran, while the Nasdaq Composite saw its first decline in five days due to setbacks at SpaceX and AMD after their earnings reports. A proposed agreement between Iran and Oman would grant Tehran control over shipping through the Strait of Hormuz, a significant concession.

The Dow and S&P 500 both closed at record levels on August 4, as oil prices and US Treasury yields fell due to hopes of a peace deal that might curb inflation pressures and the likelihood of a Federal Reserve rate hike. S&P 500 slipped slightly on August 5. Kenny Polcari, chief market strategist at Slatestone Wealth, noted that the market has risen dramatically but requires tangible proof of progress before accepting further gains.

Despite Elon Musk's SpaceX reporting nearly double its revenue and narrowing losses, following strong demand in its Starlink satellite communications and AI segments, the company's shares plummeted 13.6%. Advanced Micro Devices (AMD) also faced pressure after forecasting quarterly revenues exceeding estimates but saw a 7% drop due to investor skepticism over whether AI spending would translate into faster growth.

Amgen's 4.6% gain lifted the Dow, with second-quarter sales rising 9%. Eli Lilly reported a 4.9% increase after raising its full-year revenue forecast. Disney shares rose 3.6% following better-than-expected third-quarter profit. Labor market data showed a slowdown in July's private payrolls growth, and the Institute for Supply Management's non-manufacturing purchasing managers index increased to 54.1 from 54.0 in June.

Federal Reserve officials indicated a possible start to interest rate hikes. Expectations for a rate increase at the September meeting have decreased to 54.9%, down from 58.3% the previous week. On the NYSE, declining issues outnumbered advancers by a ratio of 1.15-to-1, and on the Nasdaq, 1.34-to-1. The S&P 500 recorded 34 new 52-week highs and three new lows, while the Nasdaq Composite had 107 new highs and 75 new lows, with trading volume at 17.85 billion shares, slightly above the 17.34 billion average for the session over the past 20 trading days.