U.S. stocks edged higher Wednesday morning as investors balanced escalating geopolitical tensions in the Middle East with strong bank earnings and mixed signals from the technology sector. The Dow Jones Industrial Average rose to 48,701.5, up 165.54 points, while the S&P 500 climbed to 6,978.12 and the Nasdaq Composite advanced to 23,697.
Markets opened with cautious optimism despite mounting concerns over the U.S. blockade of Iranian ports, a move that has intensified fears of broader regional conflict. Crude oil prices rose to $92.13 a barrel, reflecting supply disruption risks tied to the escalating standoff.
President Donald Trump, speaking on Fox Business with Maria Bartiromo, said he had urged Chinese President Xi Jinping not to provide military support to Iran, underscoring the administration’s effort to contain the conflict’s global spillover. The remarks added a diplomatic advance ahead of Trump's scheduled meeting with President XI next month.
Despite the continuing Iran war tensions, equities found support from strong earnings from another big bank. Bank of America reported results that exceeded expectations, driven by a surge in trading revenue and easing concerns around credit quality. The results helped lift sentiment toward large-cap banks early in the session.
Technology shares, however, showed signs of strain after semiconductor equipment maker ASML issued a weaker-than-expected outlook, raising concerns about the durability of the AI investment cycle. The company’s guidance suggested that demand tied to artificial intelligence infrastructure may moderate, tempering one of the market’s strongest growth narratives.
Volatility declined modestly, with the CBOE Volatility Index falling to 17.85, signaling that investors remain relatively composed despite geopolitical risks.
Adding a longer-term perspective, Apollo Global Management Chief Economist Torsten Slok noted that artificial intelligence is increasingly reshaping credit markets. Tech’s share of the investment-grade index has surged from 1.9% in 2006 to 10.7% today, with similar gains across high-yield and leveraged loans, highlighting how AI-linked sectors are becoming a dominant force in capital markets.
Looking ahead, investors are likely to focus on the Iran war negotiations, as well as upcoming earnings reports from companies like Netflix and Taiwan Semi Conductor.
