US stocks: Dow closes at record on Mideast optimism; SpaceX, AMD drag Nasdaq

Stocks rallied to start the week, with the Dow and S&P 500 closing at records on Tuesday, as oil prices and U.S. Treasury yields dropped on hopes peace talks could lead to a deal, easing inflation pressures and lowering expectations for a rate hike from the Federal Reserve.

"It's just a straight rocket shot that we've gone up, we didn't even take a breath," said Kenny Polcari, chief market strategist at Slatestone Wealth in Jupiter, Florida.

"It's progress, but the market's just going, we're not going to give it to you this time until we actually see the progress, because how many times have we been jerked around over the last four months?"

According to preliminary data, the S&P 500 lost 13.33 points, or 0.17%, to end at 7,723.19 points, while the Nasdaq Composite lost 225.32 points, or 0.85%, to 26,359.67. The Dow Jones Industrial Average rose 264.04 points, or 0.49%, to 54,349.92.

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ADP PRIVATE PAYROLLS GROWTH SLOWS

On the data front, U.S. private payrolls growth slowed in July, as per the ADP national employment report. The data was the second in a string of reports on the labor market this week before Friday's government payrolls report. Separately, the Institute for Supply Management said its nonmanufacturing purchasing managers index inched up to 54.1 last month from 54.0 in June, below the 54.5 estimate of economists polled by Reuters but above the 50 threshold that signals growth.

Data has largely reflected a stable labor market, but the war with Iran that began at the end of February has kept concerns about price pressures and the Fed's response to it as a primary concern among investors. Minneapolis Fed President Neel Kashkari said in an interview with CNBC that he believed now is the time to start slowly moving interest rates higher. Federal Reserve Board Governor Lisa Cook and San Francisco Fed President Mary Daly are scheduled to speak later in the day. Expectations for a rate hike from the central bank at its September meeting have dipped to 54.9%, according to CME FedWatch, down from 58.3% a week ago.

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