Western Digital Drops 18.5% as S&P 500 Stalls
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- Western Digital fell 18.5% and Sandisk dropped 11.3% in early trading despite forecasting quarterly revenue above expectations on AI-driven demand; both stocks had surged 200% and 400% respectively year-to-date, according to Haverford Trust's Hank Smith, who cited 'incredible expectations' and digestion.
- AppLovin plunged 17.4% after missing Wall Street quarterly revenue estimates, while Datadog lost 16.7% on expectations of slowing Q3 revenue growth, dragging down software peers including Atlassian, Salesforce, Adobe, and Zscaler.
- Intel and AMD shares declined and the Philadelphia chip index fell 1.5% as the broader chip sector came under pressure following the storage and memory names' steep drops.
- SpaceX rose 2% ahead of its first post-IPO share lockup expiry on August 6, even as broader AI-linked stocks showed signs of cooling from a recent rally.
- Brent crude held near $80 a barrel on speculation that a proposed US-Iran-Oman deal could give Tehran control over ships entering the Gulf through the Strait of Hormuz.
- Federal Reserve Chairman Kevin Warsh has dialed back forward guidance, making Friday's July nonfarm payrolls report critical for assessing the rate path; weekly jobless claims edged higher last week.
- Energy, consumer staples, and healthcare led sector gains with nine of the 11 S&P 500 sectors trading higher; the Nasdaq remains about 3% from an all-time high after bouncing off near-correction lows.
Why it matters: Companies beating expectations still got punished: Western Digital fell 18.5% after forecasting above-consensus AI-driven revenue, on top of a 200% YTD run. With Fed Chair Kevin Warsh dialing back forward guidance, Friday's nonfarm payrolls report becomes the single key input for the rate path, while any confirmed US-Iran deal near Brent's $80 level could unwind geopolitical risk premium.
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