U.S. stock markets ended the session mixed on Thursday as pockets of weakness in software and mixed chip signals offset support from earnings beats and stronger-than-expected labor data. The S&P 500 Index rose slightly, the Nasdaq 100 Index climbed, while the Dow Jones Industrial Average fell.
Investor focus remains split between company-specific results—particularly margins and revenue guidance—and the rate path implied by macro data and recent Fed commentary reported by the Financial Times.
Key takeaways
- Stocks were mixed: The S&P 500 edged higher, the Nasdaq 100 rose, and the Dow fell.
- Software selloff drove pressure: Datadog and AppLovin dropped after results and outlook fell short of expectations.
- Earnings and economic data offered support: Several companies forecast stronger revenue than expected, while U.S. economic reports beat consensus.
- Rates remained a swing factor: U.S. Treasury moves reflected both oil-driven inflation concerns and labor-market strength.
- Crude rallied on Gulf tensions: WTI advanced after reports of a missile attack involving a Saudi oil tanker.
What drove the move
Market direction was largely shaped by results from growth-oriented sectors and the evolving read-through to earnings expectations.
Software stocks weighed on sentiment after Datadog plunged following a report that its Q2 adjusted gross margin came in below consensus. AppLovin also fell sharply after missing analysts’ revenue estimates. The broader decline in software names was mirrored by additional weakness in several enterprise and cloud-related companies.
In semiconductors, the picture was more uneven. Memory chip names retreated after SanDisk forecast weaker-than-expected Q1 revenue, while chip-related equities later rebounded from early losses. The initial drop was also linked to negative carryover from South Korea’s Kospi decline, driven by weakness in major memory suppliers.
Despite early pressure, several individual earnings reports supported the tape. Motorola Solutions, IonQ, Paycom Software, Ormat, and Parker-Hannifin rose after forecasting stronger-than-expected revenue.
Market reaction and macro signals
U.S. economic data offered a counterweight to company-level disappointments. According to the reports cited, weekly initial unemployment claims increased by 1,000 to 199,000, beating expectations for 205,000—an outcome viewed as consistent with a firmer labor market.
Further, Q2 nonfarm productivity increased by 1.4%, exceeding expectations of 0.6%. Q2 unit labor costs rose 1.3%, below expectations of 2.1%. Together, the data were interpreted as mixed for the Federal Reserve: labor strength can reinforce a hawkish posture, while productivity outperformance and lower unit labor cost growth can temper inflation pressure.
At the same time, a Financial Times report was bearish for both stocks and bonds, according to the article, saying Fed Chair Warsh is willing to raise interest rates at the September FOMC meeting if inflation readings and market expectations shift further toward tightening. That framing added to sensitivity around the rate outlook.
Oil, geopolitical risk, and what it implies for inflation
In commodities, WTI crude oil prices rose more than 1% after the Houthis reportedly targeted a Saudi oil tanker with a ballistic missile in the Gulf of Aden. The market is also watching whether an Iran-Oman agreement to partially reopen the Strait of Hormuz moves forward.
Officials indicated the route would remain active for two to four months, but that it does not guarantee a full reopening. The report also noted that any normalization would depend on the U.S. lifting its blockade on Iranian ports.
For investors, crude strength can feed directly into inflation expectations, which in turn affects equity discount rates and bond yields.
Rates and European policy pricing
U.S. Treasury market dynamics reflected the tug-of-war between inflation signals from energy prices and the “cooling” elements in productivity and unit labor cost data. According to the article, September 10-year Treasury notes fell by 6 ticks, while the 10-year yield rose by 2.9 basis points to 4.641%.
In Europe, government bond yields moved higher. The report cited the German 10-year bund yield up 0.7 basis points to 3.118% and the UK 10-year gilt yield up 2.7 basis points to 4.917%. Eurozone June retail sales fell 0.3% month over month versus expectations of a 0.1% increase, while German June factory orders rose 3.1% month over month versus expectations of 0.5%.
Markets were pricing an 84% chance of a 25 basis point rate hike by the ECB at its September 10 meeting, according to the same source.
Company results: what won and what missed
Stock moves were dominated by earnings and guidance revisions across software, chips, and industrials.
- Software weakness: Datadog fell after Q2 adjusted gross margin came in below consensus, while AppLovin dropped after missing Q2 revenue estimates.
- Chip pullback then recovery: Memory chipmakers slid following SanDisk and Western Digital guidance concerns, with Western Digital down more than 13% and SanDisk down more than 6%. The broader semiconductor complex later rebounded, with ARM rising more than 5% and ASML, ON Semiconductor, and Marvell all up more than 2%.
- Notable upside reactions: Paycom Software rose after raising its full-year revenue estimate, Unity Software gained after Q2 revenue exceeded consensus, and Ormat Technology climbed after lifting its full-year forecast. Albemarle led S&P 500 gainers after reporting Q2 adjusted EPS above consensus.
- Guidance misses: HubSpot fell after forecasting Q3 revenue below consensus, while Honeywell Aerospace dropped after cutting its full-year organic growth estimate.
For investors tracking the earnings cycle, the article also cited Bloomberg Intelligence expectations for Q2 earnings growth of 23% and that AI spending is expected to account for most of earnings, with AI infrastructure contributing nearly 60% of S&P 500 earnings-per-share growth in Q2. Bloomberg data cited in the piece also indicated 86% of S&P 500 companies that have reported Q2 results beat estimates.
What to watch next
Traders will likely continue to weigh forward-looking guidance against shifting rate expectations. Upcoming catalysts include additional earnings reports and further economic releases that could reinforce or challenge the current labor and inflation narrative. With markets also discounting a 58% chance of a 25 basis point rate hike at the next FOMC meeting on September 15–16, any new policy signal or inflation-sensitive data could quickly change equity and bond pricing.
