Dow Jones and S&P 500 reach fresh record highs

The S&P 500 and Dow Jones Industrial Average traded at fresh record highs on Wednesday as growing optimism over a diplomatic breakthrough in the Middle East boosted investor appetite for risk.

As of 9:34 a.m. New York time, the Dow Jones Industrial Average had gained 450.8 points, or 0.83%, to 54,536.68, while the S&P 500 rose 0.61% to 7,783.50. The Nasdaq Composite advanced 0.41% to 26,694.42, marking its highest level in more than a month.

Corporate earnings and economic developments support markets

AMD shares fell 6.5% despite the company issuing quarterly revenue guidance that topped Wall Street expectations, as investors judged the outlook insufficient to justify the stock's 142% rally since the beginning of the year.

In contrast, Nvidia shares climbed 3.4% after SpaceX announced it would exclusively use the company's technology to build its artificial intelligence data centers.

Other major technology stocks also moved higher, with both Microsoft and Alphabet gaining around 1%.

On the economic front, the latest ADP report showed that US private-sector job growth slowed in July. Investors are now awaiting Friday's official nonfarm payrolls report, which is widely viewed as a key gauge of the strength of the US economy.

Despite generally resilient economic data, markets continue to face uncertainty amid geopolitical tensions in the Middle East, higher energy costs, and the lack of clear guidance from the Federal Reserve on the future path of monetary policy.

Against this backdrop, Minneapolis Federal Reserve President Neel Kashkari told CNBC that the time had come to begin gradually raising interest rates, while investors awaited comments from other Federal Reserve officials later in the day.