Nasdaq Futures Slip as Western Digital and Sandisk Sink on Disappointing Guidance

September Nasdaq 100 E-Mini futures (NQU26) are down -0.42% this morning as concerns about the AI trade linger after forecasts from Western Digital and Sandisk fell short of investors’ lofty expectations.

Western Digital (WDC) tanked over -14% in pre-market trading after the storage maker issued good but not great FQ1 guidance, failing to meet investors’ lofty expectations. Also, Sandisk (SNDK) slumped more than -9% in pre-market trading after the memory maker issued disappointing FQ1 revenue guidance, overshadowing its strong FQ4 results. Those losses spilled over into other AI-related stocks and weighed on Nasdaq 100 futures.

Meanwhile, the price of WTI crude edged higher on Thursday as investors awaited further developments in the Middle East. Iran said on Wednesday it had reached an agreement with Oman on a proposed shipping route through the Strait of Hormuz, with a joint statement from the two countries under review, according to Iranian officials. However, a lasting U.S.-Iran agreement remains elusive, with U.S. President Donald Trump saying on Wednesday he would “see what happens” in the ongoing negotiations.

Market participants are now awaiting a fresh batch of U.S. economic data and corporate earnings reports.

In yesterday’s trading session, Wall Street’s three main equity benchmarks ended mixed. Insulet (PODD) tumbled over -20% and was the top percentage loser on the S&P 500 after the medical device maker cut its full-year revenue growth guidance. Also, SpaceX (SPCX) plunged more than -13% and was the top percentage loser on the Nasdaq 100 after Elon Musk’s rocket, satellite, and AI conglomerate posted higher-than-expected spending on its AI business in Q2, and finance chief Bret Johnsen said heavy capital expenditures are expected to continue this year. In addition, Advanced Micro Devices (AMD) slumped over -7% after the chipmaker issued Q3 revenue guidance that failed to impress investors, and SpaceX CEO Elon Musk said the rocket and AI company would exclusively use chips from rival Nvidia. On the bullish side, Charles River Laboratories (CRL) climbed more than +11% and was the top percentage gainer on the S&P 500 after the contract drug developer posted better-than-expected Q2 results and raised its full-year EPS guidance.

“The weight of the evidence continues to support giving the bull market in stocks the benefit of the doubt, even as we experience more bumps along the way. Earnings remain our north star, the economy continues to show resilience, market participation has broadened, and valuation excesses have largely been worked off,” said Keith Lerner at Truist Advisory Services.

Economic data released on Wednesday were mixed. The ADP National Employment report showed that U.S. private-sector payrolls rose by 44K in July, weaker than expectations of 68K. Also, the U.S. ISM services index rose to 54.1 in July, weaker than expectations of 54.5. At the same time, the U.S. July S&P Global services PMI was revised higher to 54.6, stronger than expectations of no change at 53.6.

Minneapolis Fed President Neel Kashkari said on Wednesday in an interview with CNBC that the central bank should begin raising interest rates gradually to curb inflation, which remains too high. “Now is the time to start slowly moving up as we get more data in,” Kashkari said. Also, Fed Governor Lisa Cook reiterated that she is prepared to raise interest rates if inflation fails to ease, warning that policymakers may not have the luxury of waiting for inflation to return to their 2% target. “If I do not see signs of continued disinflation soon, I am prepared to act,” Cook said. In addition, San Francisco Fed President Mary Daly said she supported the central bank’s decision to leave interest rates unchanged last week, but warned that high inflation could prove to be a broader problem requiring more forceful action from policymakers.

Meanwhile, U.S. rate futures have priced in a 54.9% probability of a 25-basis-point rate hike and a 45.1% chance of no rate change at September’s monetary policy meeting.

Second-quarter corporate earnings season continues, with notable companies such as ConocoPhillips (COP), Cloudflare (NET), Datadog (DDOG), Constellation Energy (CEG), and Monster Beverage (MNST) slated to release their quarterly results today. According to Bloomberg Intelligence, companies in the S&P 500 are expected to post an average +26% jump in quarterly earnings for Q2 compared to the previous year.

On the economic data front, investors will focus on U.S. Initial Jobless Claims data, set to be released in a couple of hours. Economists expect this figure to be 203K, compared to last week’s number of 197K.

Preliminary U.S. Unit Labor Costs and Nonfarm Productivity data will also be closely watched today. Economists forecast Q2 Unit Labor Costs to rise +2.2% q/q and Nonfarm Productivity to rise +0.6% q/q, compared to the first-quarter numbers of +1.8% q/q and +0.3% q/q, respectively.

U.S. Wholesale Inventories data will be released today as well. Economists anticipate that the final June figure will remain unrevised at +0.3% m/m.

In addition, market participants will parse comments today from St. Louis Fed President Alberto Musalem.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.63%, up +0.26%.

The Euro Stoxx 50 Index is up +0.58% this morning, hitting a new record high as investors digest a largely upbeat batch of corporate earnings reports and await developments in U.S.-Iran talks. Media stocks led the gains on Thursday, with WPP Plc (WPP.LN) jumping over +25% after the advertising group reported that its key top-line metric fell less sharply last quarter, while CEO Cindy Rose credited her turnaround plan with driving a string of account wins. Telecom stocks also climbed, led by a more than +5% gain in Deutsche Telekom AG (DTE.D.DX) after it expanded its share buyback program. In addition, defense stocks advanced. Meanwhile, the benchmark index pared some of its gains after weaker-than-expected retail sales data from the region. Eurostat said on Thursday that Eurozone monthly retail sales unexpectedly fell in June, reflecting the lingering impact on confidence following the outbreak of the Middle East conflict. Separately, data showed that Germany’s monthly factory orders rose much more than expected in June as easing tensions in the Middle East helped drive energy prices lower during the month. In other corporate news, Siemens AG (SIE.D.DX) slumped over -6% after disappointing investors with a modest increase in its guidance.

Germany’s Factory Orders, Italy’s Industrial Production, and Eurozone’s Retail Sales data were released today.

The German June Factory Orders rose +3.1% m/m, stronger than expectations of +0.5% m/m.

The Italian June Industrial Production unexpectedly fell -1.0% m/m and -0.6% y/y, weaker than expectations of +0.3% m/m and +1.0% y/y.

Eurozone’s June Retail Sales fell -0.3% m/m and rose +0.7% y/y, weaker than expectations of +0.1% m/m and +1.0% y/y.

Asian stock markets today settled mixed. China’s Shanghai Composite Index (SHCOMP) closed up +0.57%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -0.93%.

China’s Shanghai Composite Index closed higher today, boosted by gains in chip and gold-related stocks. Semiconductor stocks climbed on Thursday, bucking losses among regional peers. Non-ferrous metal stocks also advanced, supported by higher gold prices. Meanwhile, shares of major insurers and banks fell in Hong Kong after Caixin reported that authorities in Beijing and Hangzhou had begun applying a 20% personal income tax on returns from Hong Kong offshore insurance policies. In corporate news, MiniMax Group jumped over +17% in Hong Kong on its first day of trading under the Stock Connect program, which allows mainland Chinese investors to buy Hong Kong-listed stocks. Investor focus now shifts to China’s trade data for July, scheduled for release on Friday, which will offer clues about the strength of the nation’s economy. Economists project the nation’s trade activity to remain strong in July. Attention will then turn to China’s July inflation data. Economists expect China’s consumer inflation to moderate further, while producer inflation is projected to ease after accelerating for three consecutive months. A weaker-than-expected CPI reading would likely strengthen calls for more forceful policy support and could place greater focus on the “effective and practical new measures” pledged by the Politburo for the September-October period.

Japan’s Nikkei 225 Stock Index closed lower today, weighed down by weakness in heavyweight tech stocks. Technology was the only sector to finish in negative territory on Thursday. Memory chipmaker Kioxia Holdings tumbled over -10%, tracking sharp declines in Sandisk and Western Digital in U.S. post-market trading after both companies reported earnings. Also, heavily weighted AI-related stocks such as chip-making equipment maker Tokyo Electron slid over -5% and tech investor SoftBank Group fell more than -4%. The declines followed overnight losses in U.S. chipmaker AMD and Elon Musk-led AI and rocket company SpaceX after their quarterly earnings. “Because these semiconductor-related stocks have a high impact on the index, the selloff looks harsh at first glance, but overall market sentiment hasn’t deteriorated drastically,” said Wataru Akiyama at Nomura Securities. Gains in healthcare, energy, and consumer-related stocks helped limit the benchmark index’s losses. Meanwhile, Japanese government bond yields fell on Thursday after a 30-year bond auction attracted solid demand, bringing some relief to a market rattled by yen volatility and concerns over the government’s debt load. Elsewhere, foreign investors sold a net 392.5 billion yen worth of Japanese stocks in the week ended August 1st, following net purchases of 912.4 billion yen in the previous week, according to Ministry of Finance data. In corporate news, Nitto Boseki cratered over -17% after the electronic materials supplier made no changes to its capacity expansion plans over the past three months, disappointing investors. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed down -9.95% to 29.78.

Pre-Market U.S. Stock Movers

Western Digital (WDC) tanked over -14% in pre-market trading after the storage maker issued good but not great FQ1 guidance, failing to meet investors’ lofty expectations.

Sandisk (SNDK) slumped more than -9% in pre-market trading after the memory maker issued disappointing FQ1 revenue guidance, overshadowing its strong FQ4 results.

Other chip and AI infrastructure stocks slid in pre-market trading amid a slump in Western Digital and Sandisk. Micron Technology (MU) was down over -4%, while Marvell Technology (MRVL) and Intel (INTC) were down more than -1%.

AppLovin (APP) tumbled over -19% in pre-market trading after the ad technology platform reported weaker-than-expected Q2 revenue and gave soft Q3 revenue guidance.

SoundHound AI (SOUN) soared more than +26% in pre-market trading after the company posted stronger-than-expected Q2 results and raised the lower end of its full-year revenue guidance.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Thursday - August 6th

ConocoPhillips (COP), Parker-Hannifin (PH), Howmet Aerospace (HWM), Cloudflare (NET), Datadog (DDOG), Constellation Energy (CEG), Monster Beverage (MNST), Airbnb (ABNB), Warner Bros. Discovery (WBD), Aflac (AFL), Republic Services (RSG), Targa Resources (TRGP), Sempra (SRE), Cheniere Energy (LNG), Becton, Dickinson and Company (BDX), Microchip Technology (MCHP), American International Group (AIG), Keurig Dr Pepper (KDP), Consolidated Edison (ED), Natera (NTRA), Rocket Companies (RKT), Kenvue (KVUE), ResMed (RMD), Zoetis (ZTS), Twilio (TWLO), Fiserv (FISV), ATI Inc. (ATI), Fox Corporation (FOXA), Ralph Lauren (RL), US Foods Holding (USFD), Insmed (INSM), Roku (ROKU), Viatris (VTRS), MACOM Technology Solutions Holdings (MTSI), Evergy (EVRG), ITT Inc. (ITT), Akamai Technologies (AKAM), Gen Digital (GEN), Lamar Advertising Company (LAMR), Unity Software (U), Reinsurance Group of America (RGA), Somnigroup International (SGI), Onto Innovation (ONTO), Texas Roadhouse (TXRH), BioMarin Pharmaceutical (BMRN), Advanced Drainage Systems (WMS), Arrow Electronics (ARW), The Magnum Ice Cream Company (MICC), Bentley Systems (BSY), Globus Medical (GMED), DraftKings (DKNG), American Healthcare REIT (AHR), Globalstar (GSAT), Applied Optoelectronics (AAOI), Cytokinetics (CYTK), Maplebear (CART), JFrog (FROG), StandardAero (SARO), Halozyme Therapeutics (HALO), CareTrust REIT (CTRE), Oscar Health (OSCR), The Trade Desk (TTD), Praxis Precision Medicines (PRAX), ESCO Technologies (ESE), MP Materials (MP), Ryman Hospitality Properties (RHP), D-Wave Quantum (QBTS), Molson Coors Beverage Company (TAP.A), Molson Coors Beverage Company (TAP), Dropbox (DBX), Celsius Holdings (CELH), Terreno Realty (TRNO), Cogent Biosciences (COGT), Karman Holdings (KRMN), Loar Holdings (LOAR), Installed Building Products (IBP), Lyft (LYFT), 10x Genomics (TXG), Sezzle (SEZL), Acushnet Holdings (GOLF), Ligand Pharmaceuticals (LGND), Starwood Property Trust (STWD), StepStone Group (STEP), Nexstar Media Group (NXST), Kodiak Gas Services (KGS), ACI Worldwide (ACIW), EPAM Systems (EPAM), ESAB Corporation (ESAB), Definium Therapeutics (DFTX), Casella Waste Systems (CWST), Scholar Rock Holding (SRRK), Rigetti Computing (RGTI), Blackstone Secured Lending Fund (BXSL), Frontdoor (FTDR), Main Street Capital (MAIN), White Mountains Insurance Group (WTM), Sotera Health Company (SHC), Versant Media Group (VSNT), HA Sustainable Infrastructure Capital (HASI), Nelnet (NNI), Edgewise Therapeutics (EWTX), WillScot Holdings (WSC), Vontier (VNT), International Bancshares (IBOC), Century Aluminum Company (CENX), Planet Fitness (PLNT), GPGI, Inc. (GPGI), nLIGHT (LASR), Covista (CVSA), MARA Holdings (MARA), Shift4 Payments (FOUR), Relay Therapeutics (RLAY), Axcelis Technologies (ACLS), ICU Medical (ICUI), MDU Resources Group (MDU), Core Natural Resources (CNR), Insight Enterprises (NSIT), iRhythm Holdings (IRTC), Post Holdings (POST), LifeStance Health Group (LFST), The GEO Group (GEO), Americold Realty Trust (COLD), Synaptics (SYNA), Concentra Group Holdings Parent (CON), Doximity (DOCS), Denali Therapeutics (DNLI), Haemonetics (HAE), Lionsgate Studios (LION), Assured Guaranty (AGO).