The three major U.S. stock indices closed with mixed results. While the Dow Jones Industrial Average reached a record high amid easing tensions in the Middle East, the Nasdaq Composite fell for the first time in five days due to sharp declines in SpaceX and AMD following their earnings reports.
On August 5, the Dow Jones Industrial Average rose by 263.18 points (0.49%) to close at 54,349.06. The S&P 500 index fell by 13.00 points (0.17%) to finish at 7,723.52, while the Nasdaq Composite dropped 221.55 points (0.83%) to end at 26,363.44. Analysts attributed the declines in the Nasdaq to profit-taking after both the Dow and S&P 500 reached record highs the previous day.
Market sentiment was supported by news that Iran and Oman are nearing an agreement on navigation in the Strait of Hormuz. Investors are hopeful that a reduction in military tensions in the Middle East could lead to a normalization of oil transport, potentially lowering international oil prices and inflationary pressures.
However, caution remained as the market awaited confirmation of the negotiations. West Texas Intermediate (WTI) crude traded in the $75 range, while Brent crude was around $79.
In the technology sector, SpaceX's stock plummeted by 13.6%, dragging down the Nasdaq. Despite reporting nearly doubled revenue and reduced operating losses in its first earnings report since going public, the company announced plans to invest heavily in AI data centers, raising concerns about future costs. Additionally, the expiration of a lock-up period on August 6, which had restricted existing shareholders from selling their shares, added to the downward pressure as fears of increased selling emerged.
AMD also reported better-than-expected earnings and revenue forecasts but saw its stock drop by 7.2%. The stock had surged prior to the earnings announcement, and investors felt the company needed to demonstrate faster growth in its AI business to meet heightened expectations. Elon Musk, CEO of SpaceX, stated that the company would exclusively use Nvidia products for its AI semiconductors, which negatively impacted AMD's stock. In contrast, Nvidia's shares rose by 3.5%, marking five consecutive days of gains.
Memory chip stocks had mixed results. Micron ended nearly flat, down 0.01%, while SK Hynix's American Depositary Receipts (ADRs) fell by 2.2%. Ahead of earnings reports, SanDisk and Western Digital both dropped 5.4% in regular trading.
After the market closed, SanDisk reported quarterly results that significantly exceeded market expectations. However, its revenue forecast for the next quarter fell short of expectations, leading to a decline in after-hours trading. The stock's previous gains had already reflected strong demand for AI and rising NAND prices, and the outlook did not meet investor expectations. Western Digital also reported better-than-expected earnings but saw its stock drop by about 10% in after-hours trading.
The Dow benefited from gains in pharmaceutical and entertainment stocks. Amgen rose by 4.5% after reporting revenue that surpassed expectations, while Eli Lilly increased by 4.8% after raising its annual revenue forecast. Disney also saw a 3.6% rise following better-than-expected quarterly results.
Economic indicators released on the same day were mixed. According to the private payroll firm ADP, U.S. private sector employment increased by only 44,000 in July, the smallest gain in six months. Conversely, the Institute for Supply Management (ISM) reported that the July Services Purchasing Managers' Index (PMI) rose slightly to 54.1 from 54.0 the previous month, indicating expansion in the services sector.
Markets are closely watching the U.S. employment report set to be released on August 7. If job growth exceeds expectations, the likelihood of further interest rate hikes by the Federal Reserve could increase. The Chicago Mercantile Exchange's FedWatch tool currently indicates a 54.9% chance of a rate hike in September.
* This article has been translated by AI.
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