August 6th Market Overview

Happy Wednesday

Dow's winning streak ended today and the Middle East had nothing to do with it. Salesforce, Boeing and UnitedHealth did most of the damage today, energy and tech were the only two sectors still holding gains late in the day.

Oil closed higher even as Iran and Oman moved closer to a shipping deal. More on that this weekend on Saturdays premium newsletter.

Let’s dig in...

Today's Big Picture

1. Oil Is Not Buying The Hormuz Deal Yet

Iran and Oman are close to a temporary plan for traffic through the strait, with no fees or tolls to start. Then Iranian state media published a parliamentary draft that would bar U.S. and Israeli ships, and a tanker crew heard explosions off the coast of Oman. Crude closed above $77 here and Brent above $82. Deutsche Bank's Jim Reid says the argument has moved from whether there is a deal to what is in it, mainly whether Iran can charge tolls later.

2. The Market Wants More Than a Good Quarter

Sandisk, Western Digital, Datadog and AppLovin all grew and all finished lower. Each of them guided the current quarter to roughly what analysts already had written down. Sandisk and Western Digital have been two of the biggest winners of the past year, so some of today was profit taking. The market is paying for the outlook now, not the quarter.

3. The Job Market Is Holding Up

Claims came in at 199,000 for the week ended August 1, better than economists expected. Challenger counted 33,429 announced cuts in July, the lowest month in two years, with hiring plans the strongest for a July since 2022. Productivity beat and unit labor costs came in light, which is the friendly combination for inflation. That matters tomorrow, because this Fed is arguing about a hike, not a cut.

Market Overview

Index Performance

Stock spotlight

SpaceX $SPCX ( ▲ 4.7% )  
freed up to 911.5 million shares today, more than doubling the stock that trades openly. It closed Wednesday at $108.27, its lowest since the June debut, and finished higher anyway.

Sandisk $SNDK ( ▼ 5.19% )  
guided to $44 to $46 a share on revenue of $10.3 billion to $10.8 billion. The Street wanted $44.72 and $10.82 billion. Close, and not close enough.

Western Digital $WDC ( ▼ 12.38% )  
guided to $3.85 to $4.15 a share on $4 billion to $4.2 billion, against $3.84 and $4.06 billion expected. Memory names in Korea sold off overnight for the same reason.

Datadog $DDOG ( ▼ 18.81% )  
beat on both lines, then guided third quarter revenue to $1.135 billion to $1.145 billion. Consensus sat at $1.11 billion, so the beat was there and the stock still went down.

AppLovin $APP ( ▼ 19.74% )  
sees third quarter adjusted profit of $1.71 billion to $1.74 billion. Analysts wanted $1.75 billion, and revenue came in a hair light.

Big name updates

Salesforce $CRM ( ▼ 3.13% )  
shuffled its leadership and was the single biggest weight on the Dow.

Alphabet $GOOGL ( ▼ 1.43% )  
is raising up to $25 billion in bonds, on top of more than $50 billion already sold this year. Buyers are asking a wider spread than they were Wednesday.

ConocoPhillips $COP ( ▲ 1.64% )  
earned $3.24 a share against $2.94 expected. Ryan Lance retires next month after 14 years and becomes executive chairman, with finance chief Andy O'Brien taking the job.

Moderna $MRNA ( ▼ 3.51% )  
won FDA approval for mFLUSIVA, the first mRNA flu vaccine, cleared for adults 50 and up and ready for this season. The stock opened higher and gave all of it back.

Warner Bros. Discovery $WBD ( ▲ 1.89% )  
CEO David Zaslav told analysts he fully expects the Paramount deal to close.

Other notable company news

Honeywell Aerospace $HON ( ▼ 2.99% )  
cut its 2026 sales outlook and missed on both lines, blaming supply chain problems.

Papa John's $PZZA ( ▼ 17.14% )  
ended an 18 month sale review, suspended its dividend, and posted another drop in North American same store sales.

Zillow $Z ( ▼ 9.11% )  
lost its outperform rating at Evercore ISI, which cut its target to $40 from $80 on a soft second half and a change in how the company plans to make money.

LegalZoom $LZ ( ▼ 29.44% )  
was cut to neutral at JPMorgan, where Ella Smith wrote that Google traffic has slowed materially as AI answers move into search results.

Apollo Global Management $APO ( ▼ 1.43% )  
won easyJet with a bid near $7.7 billion, ending a bidding war with Castlelake.

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Sector Watch

Bond market

Higher oil pushed yields up. The 10 year finished near 4.67 and the 30 year near 5.21, with the dollar closing higher. Freddie Mac has the average 30 year mortgage at 6.69, the highest in a year.

Policy watch

Fed

Governor Lisa Cook said she is ready to raise rates if inflation does not start cooling. Traders now give a September hold a little better than four in ten odds, up from about a third last week. Hold or hike is the whole debate.

Trade and energy

• Congo banned exports of copper and cobalt concentrate, effective immediately. It mines about three quarters of the world's cobalt and ranks second in copper behind Chile, and it wants the refining done at home. Copper futures moved back toward the record set in January.

• RWE is paying $1.22 billion to hand back its offshore wind leases off New York, California and Louisiana. Invenergy, TotalEnergies and an EDP Renewables venture cut similar deals earlier this year. RWE is putting the money into Louisiana gas infrastructure instead.

International

Commerzbank confirmed it has started talks with UniCredit after years of resisting. Profit nearly doubled last quarter, so it is negotiating from a stronger seat than it had a year ago.

What to Watch

The AI company quietly automating every Walmart distribution center. 
23 billion in orders on the book.

It's just one of seven names in this free MarketBeat report.

Friday's Jobs Report

Economists look for 80,000 jobs and unemployment steady at 4.2. June came in at 57,000, so the bar is low.

Tonight's Earnings

Airbnb, Lyft, Monster Beverage, AIG and Sweetgreen report after the close. Read the outlook before the quarter, because that is what the tape punished all day.

- John

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