U.S. stocks were mixed on Thursday as investors weighed another full day of corporate earnings against signs of easing tensions in the Middle East. The Dow Jones Industrial Average moved lower, while the S&P 500 and Nasdaq hovered around the flatline as Wall Street digested a fresh round of earnings reports and awaited Friday's closely watched jobs report.
Investor sentiment remained cautious as markets continued evaluating whether strong corporate results can justify elevated valuations, particularly across AI-related stocks. At the same time, hopes for a temporary shipping agreement through the Strait of Hormuz helped keep oil prices in check, easing some concerns about inflation despite lingering geopolitical uncertainty.
Market Movers:
- SoundHound AI (SOUN) +24%: Shares surged after the voice AI company delivered stronger-than-expected quarterly revenue and earnings while raising its full-year outlook. Management pointed to accelerating enterprise adoption of voice and agentic AI solutions and said guidance could increase further following its planned acquisition of LivePerson.
- Unity Software (U) +12%: Shares rallied after the game engine developer reported better-than-expected quarterly results and issued an upbeat third-quarter outlook. Strong growth in its Grow Solutions business and continued momentum from its AI-powered Vector platform fueled investor optimism.
- Viatris (VTRS) +4%: Shares gained after the drugmaker topped quarterly expectations, raised its full-year guidance, and announced the sale of the global rights to its dry eye treatment Tyrvaya. The transaction strengthens the company's balance sheet while allowing management to focus on its core portfolio.
- AppLovin (APP) -19%: Shares tumbled after the advertising technology company reported quarterly revenue and EBITDA below Wall Street expectations. While third-quarter guidance was generally in line with forecasts, investors appeared disappointed after the stock's strong run leading into earnings.
- Western Digital (WDC) -17%: Shares fell despite reporting quarterly results and guidance that exceeded expectations. Investors took profits following the stock's massive rally this year, overshadowing continued strength in AI-driven storage demand.
- Datadog (DDOG) -15%: Shares declined even after the cloud software company beat earnings estimates and raised its full-year outlook for a second consecutive quarter. The sell-off reflected elevated investor expectations rather than weakness in the company's underlying business, which continues to post strong customer and revenue growth.
- Celestica (CLS) -14%: Shares slid after the electronics manufacturer announced a $3 billion equity offering. Investors focused on potential shareholder dilution, even as the company said the proceeds will support expansion of its AI infrastructure business.
- SanDisk (SNDK) -12%: Shares dropped after mixed first-quarter revenue guidance overshadowed another strong earnings report. Although profitability remained well ahead of expectations, investors were disappointed by a revenue outlook that came in slightly below consensus estimates.
Hormuz Developments Keep Oil in Focus
Markets continued monitoring developments in the Middle East after Iran and Oman signaled progress toward a temporary shipping arrangement through the Strait of Hormuz. While negotiations remain fluid, the prospect of improved energy flows helped temper concerns about another sharp spike in oil prices. Lower energy prices could help relieve inflation pressures, though investors remain cautious given the geopolitical uncertainty surrounding the region.
Labor Market Data Sets the Stage for Jobs Report
Fresh labor market data painted a relatively stable picture of the U.S. economy ahead of Friday's July employment report. Weekly jobless claims remained near historically low levels, while July layoff announcements fell to their lowest level in two years, suggesting employers continue to hold onto workers despite economic uncertainty. The employment report will likely play a key role in shaping expectations for the Federal Reserve's next policy decision and the broader interest rate outlook.
AI Earnings Continue to Face High Expectations
Another round of earnings reinforced that strong financial performance alone is no longer enough to satisfy investors. Several technology companies delivered earnings beats and raised guidance, yet still faced sharp share-price declines as Wall Street continues scrutinizing valuations and AI spending. The mixed reactions underscore that investors are demanding not only strong growth but also clear evidence that AI investments are translating into sustainable profits and cash flow.
Looking Ahead
Attention now turns to Friday's U.S. jobs report, which could provide fresh clues about the health of the labor market and influence expectations for Federal Reserve policy. Investors will also continue watching earnings season for additional insight into corporate spending trends, particularly across AI, cloud computing, and enterprise software. Meanwhile, developments surrounding the Strait of Hormuz remain a key macro catalyst. Continued progress toward a lasting shipping agreement could ease pressure on energy markets and provide additional support for equities if geopolitical tensions continue to subside.