By Chuck Mikolajczak and Johann M Cherian
NEW YORK, Aug 5 (Reuters) - The Dow closed at a record on Wednesday on signs of progress for a peace deal with Iran, while the Nasdaq saw its first decline in five sessions as SpaceX and AMD stumbled following their quarterly earnings.
A proposed deal between Iran and Oman would give Tehran control over ships entering the Gulf through the Strait of Hormuz, a senior Iranian source and two regional officials told Reuters, in one of the biggest concessions yet
to Iran.
Stocks rallied to start the week, with the Dow and S&P 500 closing at records on Tuesday, as oil prices and U.S. Treasury yields dropped on hopes peace talks could lead to a deal, easing inflation pressures and lowering expectations for a rate hike from the Federal Reserve. The S&P recorded a slight decline on Wednesday.
"It's just a straight rocket shot that we've gone up, we didn't even take a breath," said Kenny Polcari, chief market strategist at Slatestone Wealth in Jupiter, Florida.
"It's progress, but the market's just going, we're not going to give it to you this time until we actually see the progress, because how many times have we been jerked around over the last four months?"
The Dow Jones Industrial Average rose 263.18 points, or 0.49%, to 54,349.06, the S&P 500 lost 13.00 points, or 0.17%, to 7,723.52 and the Nasdaq Composite lost 221.55 points, or 0.83%, to 26,363.44.
SPACEX SHARES TUMBLE ON AI SPENDING CONCERNS
Elon Musk-led SpaceX's revenue nearly doubled and operating losses narrowed in its first earnings report since going public, fueled by its booming Starlink satellite communications and AI businesses, but shares tumbled 13.6% on concerns about how long the company could maintain spending on AI-related investments such as data centers.
Shares could face additional pressure from the expiry of the stock's post-IPO lock-up period starting on Thursday.
Advanced Micro Devices forecast quarterly revenue above estimates, reflecting strong AI demand. However, shares dropped 7% as investors look for greater evidence the massive AI spending will result in faster growth.
A 4.6% gain in Amgen helped buoy the Dow, providing more than 100 points to the upside for the average, as second-quarter sales for the drugmaker rose 9%. Rival Eli Lilly jumped 4.9% after raising its full-year revenue forecast and the S&P 500 healthcare closed up 1.3%, one of the best-performing sectors on the session.
Also helping to boost the Dow was a 3.6% rise in Disney shares after beating third-quarter profit expectations.
ADP PRIVATE PAYROLLS GROWTH SLOWS
On the data front, U.S. private payrolls growth slowed in July, as per the ADP national employment report. The data was the second in a string of reports on the labor market this week before Friday's government payrolls report.
Separately, the Institute for Supply Management said its non-manufacturing purchasing managers index inched up to 54.1 last month from 54.0 in June, below the 54.5 estimate of economists polled by Reuters but above the 50 threshold that signals growth.
Data has largely reflected a stable labor market, but the war with Iran that began at the end of February has kept concerns about price pressures and the Fed's response to it as a primary concern among investors.
Minneapolis Fed President Neel Kashkari said in an interview with CNBC that he believed now is the time to start slowly moving interest rates higher. Federal Reserve Board Governor Lisa Cook and San Francisco Fed President Mary Daly are scheduled to speak later in the day.
Expectations for a rate hike from the central bank at its September meeting have dipped to 54.9%, according to CME FedWatch, down from 58.3% a week ago.
Declining issues outnumbered advancers by a 1.15-to-1 ratio on the NYSE and by a 1.34-to-1 ratio on the Nasdaq.
The S&P 500 posted 34 new 52-week highs and three new lows while the Nasdaq Composite recorded 107 new highs and 75 new lows.
Volume on U.S. exchanges was 17.85 billion shares, compared with the 17.34 billion average for the full session over the last 20 trading days.
(Reporting by Chuck Mikolajczak; additional reporting by Johann M Cherian and Shashwat Chauhan in Bengaluru; Editing by Deepa Babington and Lisa Shumaker)
