SpaceX's first profit lifts tech stocks; Nasdaq rises 1.05%

US technology stocks, rattled in recent sessions by concerns over the profitability of AI investment, rebounded Wednesday on strong earnings from major companies. SpaceX's first profit since its listing and expectations of a merger with Tesla lifted investor sentiment, pushing all three major New York indexes higher, with the Nasdaq gaining more than 1 percent.

The Dow Jones Industrial Average closed Wednesday up 360.21 points, or 0.69 percent, at 52,856.09. The S&P 500 rose 44.60 points, or 0.58 percent, to 7,757.17, drawing close to the all-time high it set earlier this month. The tech-heavy Nasdaq Composite climbed 278.04 points, or 1.05 percent, to 26,702.86.

The rally was led by strong results from SpaceX, the space company headed by Elon Musk. SpaceX posted its first profit since going public, and Musk formally raised the possibility of a merger with electric vehicle maker Tesla, improving investor sentiment. SpaceX shares surged 7.8 percent, while Tesla rose 3.4 percent.

Nvidia, the bellwether AI semiconductor stock, also advanced 2.5 percent. AI server maker Super Micro Computer jumped 9.6 percent after issuing a revenue outlook that exceeded prior estimates, citing growing demand for AI platforms.

Concerns have grown recently over the cost of building data centers amid high interest rates and doubts about the return on AI investment, but strong earnings from major companies appeared to reinforce expectations that AI-related demand remains solid.

Anxiety over AI-related stocks has not fully dissipated, however. AI cloud provider CoreWeave swung sharply during the session — rising nearly 4 percent at one point before falling 4.5 percent — and ultimately closed down 0.5 percent.

"Sentiment around tech stocks has shifted, but significant pressure in credit markets is limiting a full-scale rally," said Mark Hackett, chief market strategist at Nationwide.

He added that skepticism over the sustainability of AI infrastructure expansion and the financial health of companies involved remains high, and said investors will be looking to next week's earnings reports from major technology firms for further clarity.

The prospect of renewed Russia-Ukraine peace negotiations weighed on oil prices, limiting upward pressure. Russian President Vladimir Putin signaled his willingness to resume peace talks with Ukraine through US mediation, raising hopes that disruptions to oil supply could ease.

Oil prices remained unsettled, however, as talks between the United States and Iran showed no progress and attacks continued near the Strait of Hormuz. Near the close of trading, reports emerged that the Department of State was preparing to order some staff and their families to evacuate US embassies in the Gulf region.

December-delivery Brent crude settled at $108.82 per barrel, up $0.03, or 0.03 percent, from the previous session. December-delivery West Texas Intermediate fell $0.67, or 0.68 percent, to $97.15 per barrel.