Wall Street pulled back on Thursday, snapping a record-setting run as investors weighed a mixed batch of corporate earnings and fresh geopolitical risks in the Middle East. The Dow Jones Industrial Average dropped 454 points, or 0.83%, while the S&P 500 slipped 0.18% and the Nasdaq Composite edged 0.04% lower.
Technology shares were the primary drag, with several high-profile names sliding despite reporting better-than-expected quarterly results. Western Digital and Sandisk both fell—12% and 5%, respectively—after their earnings failed to meet the elevated bar set by recent AI-driven rallies. Software stocks also struggled: AppLovin tumbled roughly 20% on mixed results, while Datadog warned of slowing revenue growth in the third quarter, sending its shares down sharply. Salesforce, a Dow component, dropped about 3% following a leadership reshuffle.
Despite the tech weakness, the broader earnings season remains supportive. According to LSEG data, 84.8% of the 382 S&P 500 companies that had reported through Wednesday morning beat analyst expectations, well above the long-term average beat rate of 68%. This suggests that underlying corporate profitability is still solid, even if some individual names are being penalized for not exceeding already lofty forecasts.
Geopolitical developments added to the cautious tone. Oil prices climbed after reports that an Iranian parliamentary committee is reviewing draft legislation that could restrict US, Israeli, and other vessels from transiting the Strait of Hormuz. Brent crude settled at $82.49 per barrel, up 3.83%, while West Texas Intermediate rose 2.75% to $77.29. The proposed legislation injects uncertainty into ongoing Iran-Oman talks aimed at reopening the strategic waterway, which had earlier fueled optimism about easing supply disruptions.
Investors also looked ahead to Friday's nonfarm payrolls report, with weekly jobless claims ticking higher as a preview. The labor market data is expected to influence Federal Reserve policy expectations, especially with Chair Kevin Warsh offering limited forward guidance in recent weeks. A stronger-than-expected jobs number could reinforce the case for holding rates steady, while a weak print might revive bets on a cut.
In other corporate news, SpaceX recovered from early losses to close higher despite the expiration of its post-IPO lock-up period, which had raised concerns about increased selling pressure as early investors became eligible to sell shares. The stock's resilience suggests that demand remains robust even with the overhang of newly tradable shares.
Looking ahead, market participants will be watching for further developments in the Middle East and the jobs report for direction. The combination of strong earnings, geopolitical uncertainty, and labor market data is likely to keep volatility elevated in the near term.
This article is for informational purposes only and does not constitute financial advice.
