US EQUITY OPEN: Nasdaq hit after slew of weak tech earnings
OPEN: Stocks have opened mixed on Thursday, with the Nasdaq underperforming following another wave of disappointing tech earnings overnight and before the open. In after-hours trade, Sandisk (SNDK) and Western Digital (WDC) came under pressure after issuing weak guidance, while Datadog (DDOG) is down around 20% after investors were left underwhelmed despite another earnings beat, wiping out all of the stock's gains since the end of June. The S&P 500 and Dow Jones are little changed, while the Russell 2000 is marginally lower, alongside the equal-weight S&P 500 (RSP). Sector performance is mixed, with Communication Services, Materials and Real Estate lagging, while Energy, Consumer Staples and Health Care outperform. Industrials are also firmer, while Technology is broadly flat despite the Nasdaq's underperformance, highlighting that today's weakness remains concentrated in a handful of large-cap names.
Crude prices are modestly firmer despite Iran and Oman agreeing on a broad framework for talks regarding the reopening of the Strait of Hormuz. However, tensions between the Houthis and Saudi Arabia continue to build following a Houthi attack on Saudi-backed forces in Yemen. Reports also suggest the Houthis are expected to announce a broader military operation shortly.
In FX, the Dollar is firmer alongside Treasury yields after the Financial Times, citing Fed sources, reported that Chair Warsh intends to maintain his hawkish communication strategy despite recent criticism. The report added that Warsh would be willing to raise rates in September should upcoming inflation data surprise to the upside and market pricing move further in that direction. Higher Treasury yields are weighing on the Swiss franc through wider yield differentials. Elsewhere, San Francisco Fed President Daly reiterated overnight that she fully supported holding rates in July and that the Committee requires additional data before determining future policy moves.
Gold continues to trade higher despite the firmer Dollar and higher Treasury yields, likely reflecting ongoing geopolitical uncertainty.
US data was mixed. Initial jobless claims remained low, pointing to a resilient labour market, while Challenger layoffs slowed from the prior month. Meanwhile, Revelio Labs' July payroll estimate slowed to 79.2k from 258.5k, although the prior was revised down sharply to 125.4k. Unit labour costs also rose by less than expected, while productivity exceeded forecasts.
Attention remains on geopolitical developments, although the primary macro focus is Friday's nonfarm payrolls report.
STOCK SPECIFICS
- SanDisk (SNDK): Q1 guidance disappointed
- Western Digital (WDC): Outlook underwhelmed
- Datadog (DDOG): Earnings missed lofty expectations
- HubSpot (HUBS): Weak sales trends and reduced growth visibility weighed
- Constellation Energy (CEG): Adjusted EPS and revenue beat
- Honeywell Aerospace (HONA): Earnings and revenue missed expectations
- Alphabet (GOOGL): Filed to sell US-denominated bonds in 10 tranches
- Moderna (MRNA): mRNA flu vaccine mFlusiva received US approval for adults aged 50 and over
- DoorDash (DASH): Revenue beat
- LegalZoom (LZ): Revenue guidance missed
This is a broad session wrap rather than a single catalyst, and the pattern it describes is a familiar one: index-level divergence driven by a narrow set of post-earnings moves, with the cap-weighted Nasdaq lagging while the equal-weight S&P and Dow sit flat. Episodes of this kind, where weakness is concentrated in crowded large-cap growth names after guidance disappoints rather than earnings misses outright, have historically been rotational rather than systemic; the tell is whether breadth deteriorates over subsequent sessions or the selling stays idiosyncratic, as the flat Technology sector alongside a weak Nasdaq suggests it is so far. The distinction between a beat that still disappoints, as with high-multiple software names trading at elevated expectations, and an outright guidance cut, as in the memory and storage complex, matters for how durable the moves tend to be: the former usually mean-reverts partially once positioning resets, the latter tracks the earnings revision cycle. On the macro side, a firm Dollar alongside higher Treasury yields on hawkish Fed communication fits the established transmission through rate differentials, with the low-yielding franc the typical casualty; gold holding up despite that combination has in past episodes signalled a geopolitical risk premium doing the heavy lifting rather than real-rate logic. The labor data flow ahead of the payrolls print is mixed by design, and the usual sequence applies: claims and private payroll proxies reprice the front end only insofar as they shift the distribution around the headline number, which remains the binding event. What bears watching is whether the hawkish Fed framing gains corroboration from other officials and whether the Gulf and Red Sea headlines migrate from background risk to freight and insurance pricing in crude.