Stocks Pressured by Weakness in Software and Tech Stocks

The S&P 500 Index ($SPX) (SPY) today is up +0.17%, the Dow Jones Industrial Average ($DOWI) (DIA) is down -0.03%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.30%.  September E-mini S&P futures (ESU26) are up +0.11%, and September E-mini Nasdaq futures (NQU26) are down -0.36%.

Stock indices are mixed today.  Weakness in software stocks is weighing on the broader market, led by a -15% plunge in Datadog after it reported Q2 adjusted gross margin below consensus.  Technology stocks are also under pressure, led by a -19% fall in AppLovin after it missed analysts’ revenue estimates.  Memory chipmakers are retreating today after SanDisk forecast weaker-than-expected Q1 revenue.  Chipmakers are also weighed down by negative carryover from today’s -4% decline in South Korea’s Kospi Index, led by losses in SK Hynix and Samsung Electronics.   

Some positive corporate earnings results are supporting stocks today. Motorola Solutions, IonQ, Paycom Software, Ormat, and Parker-Hannifin are all climbing today after forecasting stronger-than-expected revenue.   

Stocks also found support on today’s better-than-expected US economic news, including weekly jobless claims, Q2 nonfarm productivity, and Q2 labor costs.

US weekly initial unemployment claims rose by +1,000 to 199,000, showing a stronger labor market than expectations of 205,000.

US Q2 nonfarm productivity rose +1.4%, stronger than expectations of +0.6%.  Q2 unit labor costs rose +1.3%, less than expectations of +2.1%.

A report today from the Financial Times was bearish for stocks and bonds after it said Fed Chair Warsh is willing to raise interest rates at the September FOMC meeting if inflation firms and market expectations shift further towards tightening in the coming months.

Sep WTI crude oil prices (CLU26) are up more than +1% today after Yemen's Houthi rebels said they targeted a Saudi oil tanker with a ballistic missile in the Gulf of Aden.  The markets are waiting for news of an Iran-Oman agreement to partially reopen the Strait of Hormuz.  A joint statement from the two countries is under review, and the route would remain active for two to four months, though the agreement does not mean a full reopening, according to Iranian officials.  Iran said that a normalization of the strait will depend on the US lifting its blockade on Iranian ports.

The outlook for strong Q2 earnings is a bullish factor for stocks. Forecasts compiled by Bloomberg Intelligence suggest Q2 earnings may increase by +23%, close to Q1’s blowout earnings of +30%, which was more than double the +12% analysts had expected. AI spending is expected to account for most of earnings, with AI infrastructure stocks set to contribute nearly 60% of the S&P 500's earnings-per-share growth in Q2.  So far, earnings results have been positive, with 86% of the 412 S&P 500 companies that have reported Q2 earnings beating estimates, according to Bloomberg data. 

The markets are discounting a 58% chance of a +25 bp rate hike at the next FOMC meeting on September 15-16.

Overseas stock markets are mixed today.  The Euro Stoxx 50 rose to a new all-time high and is up +0.51%.  China's Shanghai Composite climbed to a 3-week high and closed up +0.57%.  Japan's Nikkei-225 Stock Average closed down -0.93%.

Interest Rates

September 10-year T-notes (ZNU6) are down -5 ticks today.  The 10-year T-note yield is up +2.2 bp to 4.635%.  T-note prices are under pressure today from a +1% increase in WTI crude oil, which raises inflation expectations.  Also, today’s smaller-than-expected increase in weekly jobless claims signals strength in the US labor market that is hawkish for Fed policy.  T-notes remained lower after a report from the Financial Times said that Fed Chair Warsh is willing to raise interest rates at next month’s FOMC meeting if inflation firms and inflation expectations increase.

Losses in T-notes are limited after Q2 nonfarm productivity rose more than expected and Q2 unit labor costs rose less than expected, dovish factors for Fed policy.

European government bond yields are moving higher today.  The 10-year German bund yield is up +0.3 bp to 3.114%.  The 10-year UK gilt yield is up +2.0 bp to 4.910%.

Eurozone June retail sales unexpectedly fell -0.3% m/m, weaker than expectations of a +0.1% m/m increase

German Jun factory orders rose +3.1% m/m, stronger than expectations of +0.5% m/m.

Markets are discounting an 84% chance of a +25 bp ECB rate hike at its next policy meeting on September 10.

US Stock Movers

Datadog (DDOG) is down more than -15% to lead software stocks lower after reporting Q2 adjusted gross margin of 80%, below the consensus of 80.7%.  Also, Salesforce (CRM) is down more than -4% to lead losers in the Dow Jones Industrials, and Palantir Technologies (PLTR) is down more than -3%.  In addition, Atlassian Corp (TEAM), Workday (WDAY), and ServiceNow (NOW) are down more than -2%, and Adobe Systems (ADBE) and Intuit (INTU) are down more than -1%. 

Memory chipmakers are sliding today on disappointing earnings from Sandisk and Western Digital. Western Digital is down more than -13%, and Sandisk (SNDK) is down more than -6% after forecasting Q1 revenue of $10.30 billion to $10.80 billion, weaker than the consensus of $11.16 billion.  Also, Micron Technology (MU) is down more than -2%. 

Paycom Software (PAYC) is up more than +23% after raising its full-year revenue estimate to $2.20 billion to $2.21 billion from a previous estimate of $2.28 billion to $2.20 billion, above the consensus of $2.19 billion. 

Unity Software (U) is up more than +11% after reporting Q2 revenue of $546.5 million, stronger than the consensus of $515 million. 

Motorola Solutions (MSI) is up more than +10% to lead gainers in the S&P 500 after reporting Q2 net sales of $3.13 billion, above the consensus of $3.00 billion. 

Parker-Hannifin (PH) is up more than +9% after reporting Q4 net sales of $5.76 billion, stronger than the consensus of $5.58 billion. 

Ormat Technologies (ORA) is up more than +7% after raising its full-year revenue forecast to $1.15 billion to $1.20 billion from a previous forecast of $1.11 billion to $1.16 billion. 

DoorDash (DASH) is up more than +3% to lead gainers in the Nasdaq 100 after reporting Q2 revenue of $4.45 billion, better than the consensus of $4.34 billion.

Honeywell Aerospace (HONA) is down more than -20% to lead losers in the S&P 500 after cutting its full-year organic growth estimate to 4% to 5% from a previous estimate of 7% to 9%.

AppLovin (APP) is down more than -19% after reporting Q2 revenue growth of $1.92 billion, below the consensus of $1.94 billion.

HubSpot (HUBS) is down more than -18% after forecasting Q3 revenue of $924 million to $925 million, well below the consensus of $942.5 million. 

Celsius Holdings (CELH) is down more than -14% after reporting Q2 revenue of $817.9 million, well below the consensus of $872.6 million.

Zillow Group (ZG) is down more than -14% after forecasting Q3 revenue of $745 million to $760 million, below the consensus of $773.6 million. 

Fiserv (FISV) is down more than -7% after reporting Q2 adjusted revenue of $4.96 billion, weaker than the consensus of $5.05 billion.

Earnings Reports (8/6/2026)

Aflac Inc (AFL), Airbnb Inc (ABNB), Akamai Technologies Inc (AKAM), American International Group Inc (AIG), Becton Dickinson & Co (BDX), Bio-Techne Corp (TECH), ConocoPhillips (COP), Consolidated Edison Inc (ED), Constellation Energy Corp (CEG), Datadog Inc (DDOG), Evergy Inc (EVRG), Fiserv Inc (FISV), Fox Corp (FOXA), Gen Digital Inc (GEN), Howmet Aerospace Inc (HWM), Kenvue Inc (KVUE), Keurig Dr Pepper Inc (KDP), Microchip Technology Inc (MCHP), Molson Coors Beverage Co (TAP), Monster Beverage Corp (MNST), Parker-Hannifin Corp (PH), Ralph Lauren Corp (RL), Republic Services Inc (RSG), ResMed Inc (RMD), Sempra (SRE), Targa Resources Corp (TRGP), Trade Desk Inc/The (TTD), Viatris Inc (VTRS), Warner Bros Discovery Inc (WBD), Zoetis Inc (ZTS).