The key facts
- SpaceX rose 7.8%: Q3 revenue grew 161% year over year, AI business grew ninefold
- Elon Musk announced the creation of special committees at SpaceX and Tesla to discuss a possible merger; Tesla rose 3.4%
- Netflix fell more than 5% due to a revenue forecast below expectations; Stoxx Europe 600 gained 0.92%
Wall Street Rally
US stock indices closed higher on Wednesday amid a rally in SpaceX and Tesla shares that supported the technology sector. Investors were assessing corporate earnings and the outlook for artificial intelligence spending. The Dow Jones Industrial Average added 360.21 points (0.69%) to 52,856.09. The S&P 500 rose 0.58% to 7,757.17, extending its winning streak to three sessions, while the Nasdaq composite climbed 1.05% to 26,702.86.
SpaceX and a Possible Merger with Tesla
SpaceX shares soared 7.8% after a report of 161% year-over-year revenue growth in the third quarter, driven by growth in the AI business and the number of Starlink subscribers. Elon Musk said that SpaceX and Tesla have formed special committees to discuss a potential merger; Tesla shares rose more than 3.4%. The ninefold growth of SpaceX's AI business revived investor interest in shares of semiconductor makers, despite lingering concerns about the scale of AI infrastructure spending and reliance on debt financing. Advanced Micro Devices gained more than 3.3%, Nvidia more than 2.5%, and Micron Technology and Marvell Technology almost 2% each.
Netflix Under Pressure
Netflix broke away from the overall positive trend, losing more than 5%: its annual revenue forecast came in below analysts' expectations, and the company also lowered its advertising revenue outlook. Investors were also watching quarterly results from Tesla, Meta Platforms, IBM and Southwest Airlines.
European Markets
European stock markets also closed higher on strong corporate earnings, despite lingering geopolitical uncertainty. The Stoxx Europe 600 index rose 0.92% to 644.49. Germany's DAX added 1.35% to 25,645.04, Italy's FTSE MIB gained 1.17% to 49,643.69, France's CAC 40 rose 1.06% to 7,921.68, and the UK's FTSE 100 added 0.19% to 10,752.88. The gains came despite ongoing concerns about the economic consequences of escalating protests in France.
