U.S. stocks traded mixed on Wednesday as investors weighed easing trade tensions against ongoing tariff uncertainty and new geopolitical developments. The S&P 500 (GSPC) edged up 0.17% by midday, briefly turning positive. Meanwhile, the Dow Jones Industrial Average (DJI) dipped 0.07%, underperforming its peers, and the Nasdaq Composite (IXIC) led the pack with a 0.71% gain.
The tech rally continued to dominate headlines, helping the Nasdaq extend its recent momentum as investors responded to developments in artificial intelligence and chip export policy.
Market Movers:
- Super Micro Computer (SMCI) +17.95%: Shares soared after the company secured a $20 billion AI infrastructure deal with Saudi Arabia’s DataVolt. The stock’s sharp climb also reflects renewed interest in shorted names, as SMCI ranks among the most shorted mid- and large-cap stocks. The rally signals strong investor enthusiasm for the global AI buildout.
- Nvidia (NVDA) +3.89%: Nvidia extended its gains after announcing a multi-billion dollar deal to supply AI chips to Saudi Arabia’s Humain. The move comes amid a broader policy reversal by the Trump administration, which is seeking to ease Biden-era export restrictions. The deal, estimated at $7 billion, pushed Nvidia’s market cap past $3 trillion again and spurred optimism about international AI demand.
- Alphabet (GOOGL) +3.00%: Alphabet posted solid gains as part of the broader tech rally, benefiting from increased investor appetite for AI-related names. The stock’s movement follows a week of bullish sentiment for mega-cap tech, bolstered by trade optimism and reduced regulatory fear. Its inclusion in the "Magnificent Seven" narrative also continues to attract institutional flows.
- Tesla (TSLA) +3.78%: Shares jumped following reports that its board is crafting a new compensation package for CEO Elon Musk. The EV maker’s stock has risen over 20% in the past five sessions, fueled by speculation around leadership continuity and stronger deliveries. Despite controversy surrounding the $56 billion pay package struck down in court, investor sentiment appears to favor Musk’s continued involvement.
- Reddit (RDDT) +15% (approx.): Reddit surged in meme-stock fashion despite no clear news catalyst. The stock, which is heavily shorted, mirrors recent speculative activity in other high-short-float names like Hims & Hers (HIMS) and Mobileye (MBLY). Its sharp gains suggest a return of retail-driven momentum trades amid a broader “risk-on” market mood.
AI Trade Heats Up on Global Demand and Policy Shifts
The AI sector remained in focus as both corporate and political developments boosted investor optimism. Nvidia’s landmark $7 billion deal with Saudi Arabia underscores the international appetite for AI hardware, even as tensions linger over chip exports to China. The Trump administration’s move to reverse Biden-era restrictions—specifically, rescinding the AI Diffusion rule—signals a friendlier regulatory environment for U.S. chipmakers aiming to expand globally.
Foxconn, Nvidia’s key server manufacturer, reinforced this bullish narrative by posting a 91% profit surge tied to AI demand. However, the Taiwanese tech giant tempered its full-year outlook, citing tariff uncertainties as a potential headwind.
Tariffs and Trade Tensions Remain a Wildcard
While market sentiment improved with the rollback of certain trade restrictions, tariffs remain a major question mark. Sony (SONY) disclosed a $700 million projected hit from U.S. tariffs, erasing expected profit gains and signaling broader global exposure to U.S. trade policy shifts. Closer to home, American Eagle (AEO) withdrew its full-year guidance due to “macro uncertainty,” further illustrating the drag that geopolitical tensions are having on corporate clarity.
Despite a wave of bullishness in tech, these mixed signals continue to sow caution across other sectors. Investors are closely watching Washington for more definitive policy direction, particularly with the 2024 election cycle heating up.
Looking Ahead
As Wall Street digests this latest round of trade and tech headlines, attention turns to upcoming earnings reports and further signals from the Biden-to-Trump policy transition. With AI fueling optimism but tariffs clouding visibility, the market appears to be transitioning from a "scare me" to a "show me" mode, as BMO’s Brian Belski framed it. For now, the tech-led rally has recaptured investor enthusiasm, but staying power will depend on corporate execution, political stability, and whether the gains can broaden beyond a few megacap names.