Wall Street closed lower on Wednesday, dragged down by communications and discretionary stocks. Investors remained cautious, awaiting major tech earnings while closely monitoring escalating Middle East tensions and artificial intelligence (AI) optimism. Two of the three benchmark indexes ended in the red, while one ended flat.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) remained virtually unchanged at 52,218.58. Sixteen components of the 30-stock index ended in the negative territory, 13 ended in the positive, while one remained unchanged.
The tech-heavy Nasdaq Composite fell 146.30 points, or 0.6%, to close at 25,690.90.
The S&P 500 lost 10.24 points, or 0.1%, to close at 7,498.96. Five of the 11 broad sectors of the benchmark index closed in the red. The Communication Services Select Sector SPDR (XLC), the Consumer Discretionary Select Sector SPDR (XLY) and the Health Care Select Sector SPDR (XLV) declined 1.3%, 0.8% and 0.6%, respectively, while the Utilities Select Sector SPDR (XLU) advanced 2.3%.
The fear gauge CBOE Volatility Index (VIX) decreased 2.4% to 16.64. A total of 15.16 billion shares were traded on Wednesday, lower than the last 20-session average of 19.05 billion. Decliners outnumbered advancers by a 1.26-to-1 ratio on the NYSE and by a 1.86-to-1 ratio on the Nasdaq.
Nasdaq Drags Wall Street Lower Ahead of Key AI Earnings
The Nasdaq led Wall Street lower on Wednesday, as mixed performance among technology stocks weighed on sentiment. Investors turned cautious ahead of a fresh round of corporate earnings that could determine whether the AI-driven market rally has enough momentum to continue.
Market participants largely avoided aggressive bets, preferring to wait for results from major companies expected to offer insight into AI-related spending, demand and profit growth. The cautious mood kept broader market gains in check.
The S&P 500 edged lower, while the Dow Jones Industrial Average finished nearly unchanged. Investors also kept a close watch on renewed Middle East hostilities, which added to uncertainty and encouraged a more defensive approach despite continued optimism surrounding AI.
Oil Surges as U.S.-Iran Conflict Threatens Hormuz Shipping
Oil prices climbed to a six-week high on Wednesday as escalating military exchanges between the United States and Iran heightened fears of disruptions to global energy supplies through the Strait of Hormuz. Brent crude settled 3.3% higher at $94 a barrel, its strongest level since early June, while U.S. stocks traded little changed as investors awaited earnings from major technology companies.
A short-lived easing in tensions between Washington and Tehran collapsed this month, leading to renewed risks for tanker traffic in the strategic waterway. President Donald Trump threatened additional strikes on Iranian infrastructure, while the U.S. military reported a 12th consecutive night of attacks. Iran's Revolutionary Guards said an oil tanker caught fire after an explosion near a reportedly mined route south of the strait, forcing two other tankers to turn back.
Consequently, Occidental Petroleum Corporation OXY and ExxonMobil Holdings Corporation XOM gained 1.8% each. Both currently carry a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Economic Data
Per a government report, for the week ending July 17, 2026, U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 2 million barrels from the previous week. The previous week’s number remained unchanged at a decrease of 1.7 million barrels.
Zacks' Research Chief Names "Stock Most Likely to Double"
Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.
This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.
Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
ExxonMobil Holdings Corporation (XOM): Free Stock Analysis Report
Occidental Petroleum Corporation (OXY): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).