U.S. and Iran, Deal or No Deal? 8 Key Items Shaping the Stock Market Wednesday

These are the early headlines and other items poised to influence the market at the start of the trading day. As we share this collection of market drivers, U.S. equity futures point to a positive start to the trading day.

1. A four-day rally in US stocks lost some momentum as investors assessed the latest earnings from technology megacaps, while oil rose as a fresh threat against Middle East shipping tempered optimism over US-Iran talks… Brent crude, meanwhile, reversed some of Tuesday’s 5.3% plunge after Yemen’s Houthi militant group threatened to escalate attacks on Saudi vessels in the northern Red Sea. Still, the commodity held around $80 a barrel after Axis reported that Washington, Tehran and Oman were nearing an agreement to resume oil flows through the Strait of Hormuz. (Bloomberg)

…the deal under discussion sets up a 60-day temporary arrangement between Oman and Iran in the Hormuz strait, which could be extended… No tolls or fees would be charged during the 60-day period. (Axios)

Yemen’s Houthi militant group said it would attack Saudi oil tankers in the northern Red Sea, a potential fresh escalation in its attacks on shipping. (Bloomberg)

The potential deal isn’t quite the full-reopening the market was hoping for. Meanwhile, reports on Wednesday morning that Yemen’s Iran-backed Houthis hit a Saudi Arabian tanker in the Red Sea are raising doubts about a potential ceasefire agreement. Now to see what may be announced on Wednesday, and what the details are.

As we’ve said many times in recent months, the details will matter, but we also expected that what we have seen in those last few months will result in a skeptical eye until signs of a lasting peace agreement emerge. With the Fear & Greed Index back flashing “Greed” and coming off the S&P 500’s rally of the last few days, there is room for the market to be disappointed.

2. ISM will release its July Services PMI report at 10 a.m. ET, and the market consensus is for the headline reading to come in at 54.5 compared to the June reading of 54.0. That would signal a step up in Service sector activity, which accounts for 85%-plus of GDP. We’ll be more focused on the innards of the report, especially after ISM’s July Manufacturing PMI report showed a softer Price index reading versus June. Mashing together the July Service report’s findings on job creation with those in the July Manufacturing PMI report and Wednesday’s July ADP Employment Report should give us a good indication of what we’ll see in Friday’s July Employment Report.

3. SpaceX said on Tuesday that quarterly revenue nearly doubled and operating losses narrowed sharply in its first earnings report since going public, buoyed by strong growth in its Starlink satellite-internet and AI businesses. But the company’s capital expenditures ballooned to more than $18 ‌billion from $2.83 billion a year earlier, and finance boss Bret Johnsen said he expected capital spending would be similar for the next couple of quarters. (Reuters)

On Tuesday, we called out that Capex and cashflow would be items to watch when SpaceX (SPCX) reported its first quarter as a public company, and that view was on the nose. While we expected the ramp in AI and data center spending and Starlink’s plan to eventually compete with wireless service providers, we were a wee bit surprised by the comment SpaceX will look to acquire more spectrum for its Starling mobile service other better compete with rivals.

That means purchasing competitors to get the spectrum it needs or competing in a government auction set for next year. This not only suggests even more spending in the near term that will increase spending concerns, it will also raise competitive concerns for the likes of AT&T (T) and Verizon (VZ) but also for Crown Castle (CCI) and American Tower (AMT).

While SpaceX’s comments about AI and data center spending builds on increasing capex from the hyperscalers and others, the comment by Elon Musk that “we’ve decided to build exclusively on Nvidia because we think the Vera Rubin architecture is the best architecture” will reinforce Nvidia’s (NVDA) competitive position and its outlook.

4. Advanced Micro Devices Inc. disappointed investors with its latest sales outlook, a sign shareholders expected more of a return from the global expansion of AI data centers. Third-quarter revenue will be $13 billion, plus or minus $300 million, the chipmaker said in a statement Tuesday. Though analysts predicted $12.5 billion on average, some Wall Street estimates were well north of $13 billion, according to data compiled by Bloomberg. (Bloomberg)

Some may blame the SpaceX comment about Nvidia as the reason why AMD (AMD) shares are falling in pre-market trading on Wednesday morning. Another factor is the 20% climb in AMD shares in the last few days that likely raised the guidance bar that AMD needed to deliver. Sifting through AMD’s comments, it sees its server business growing more than 80% in the second half of 2026 and more than 70% in 2027, leading it to expect its data center revenue more than doubling in 2027.

Mitigating that outlook in the near-term, AMD also sees “a softer PC market as higher memory and component costs weigh on demand.”

5. For the second quarter, Arista generated revenue of $3 billion, up 40% year over year and 12% quarter over quarter. This drove adjusted diluted earnings per share (EPS) of $1.02, also up 40%. For context, analysts’ consensus estimates called for revenue of $2.83 billion and adjusted EPS of $0.89, so the company crushed Wall Street’s expectations. The company’s continued innovation and expansion are increasing Arista’s market opportunity, prompting management to boost its outlook for the second time in as many quarters. Arista is now forecasting Q3 revenue of $3.3 billion and adjusted, diluted EPS of $1.07, both at the midpoint of its guidance… The company also increased its full-year revenue forecast to $12.6 billion, representing roughly 40% growth, up from its guidance for 28% growth issued just three months ago. (Yahoo! Finance)

That beat-and-raise quarter from Portfolio holding Arista Networks (ANET) speaks to the flow through of AI and data center capital spending, especially from key customers Microsoft (MSFT) and Meta (META). During the earnings call, management suggested that those two existing 10% or more customers, Arista expects to add “at least one, maybe two” new 10% plus customers before the end of 2026. That keeps us bullish on ANET shares do the comments about supply chain pressures easing.

We’ll have more to say on Arista’s quarterly results and outlook, and in that alert we’ll also update our price target on the shares.

6. Monthly revenue at Taiwanese contract electronics manufacturer Foxconn hit a record in July, surpassing T$900 billion ($27.93 billion) for the ‌first time as strong demand for AI products boosted sales, the company said on Wednesday. Foxconn, a major supplier to Nvidia and Apple said revenue last month rose 54.2% from a year earlier to T$946.5 billion. (Reuters)

We are still in the thick of the Q2 2026 earnings season, but over here at the Portfolio, we’re still collecting data points and other signals as we focus on the back half of 2026 and the road ahead. Foxconn’s July revenue support the guidance we’ve been getting from hyperscalers and bode well for our chip and networking holdings.

Foxconn also shared its smart consumer electronics division, which includes smartphones posted “strong growth.” Our read on that is key customer Apple (AAPL) has started ramping production for the new iPhone models it will likely introduce in September.

The next tech focused monthly revenue report to come is the one from Taiwan Semiconductor (TSM). After Wednesday’s market close, in addition to quarterly results from Axon (AXON), Costco (COST) will publish its July sales report. We’ll have more to say on that and Axon’s earnings on Thursday.

7. Economic data today per TipRanks: MBA Mortgage Applications Index (Weekly), ADP Employment Change Report (July), S&P Global Final Services PMI (July), ISM Services PMI (July), EIA Crude Oil Inventories (Weekly).

8. Companies reporting today per TipRanks: Open: Capri Holdings (CPRI), CVS Health (CVS), Dine Brands (DIN), Extreme Networks (EXTR), Global Payments (GPN), Global Foundries (GFS), Kennametal (KMT), Kraft Heinz (KHC), New York Times (NYT), Shake Shack (SHAK), Uber (UBER), Walt Disney (DIS).

Close: A10 Networks (ATEN), American States Water (AWR), Axon (AXON), Block (XYZ), DoorDash (DASH), Dutch Bros (BROS), elf Beauty (ELF), eBay (EBAY), Expedia Group (EXPE), Fastly (FSLY), Motorola Solutions (MSI), Neostellar Capital (NSLR), Realty Income (O), Veeco Instruments (VECO), Western Digital (WDC), Zillow (ZG).

More Pro Portfolio

At the time of publication, TheStreet Pro Portfolio was long AAPL, ANET, AXON, COST, META and MSFT.