S&P 500, Dow futures steady as MidEast deal in focus; chips stumble

• Western Digital dropped 15.5% and Sandisk fell 10.1% in premarket trading despite forecasting quarterly revenue above expectations, as results were deemed 'merely excellent' rather than showing re-acceleration for stocks up 200-400% this year
• Software stocks broadly declined following sector earnings, with AppLovin down 18.7% on revenue miss and Datadog losing 22.3% after quarterly results
• Fed rate uncertainty persists as September probabilities for no change versus a hike are now nearly even, compared to 37%/63% split last week, with weekly jobless claims and July payrolls data due this week

Market Summary: S&P 500, Dow Futures Steady as Chip Stocks Decline

Market Overview

U.S. futures showed mixed performance Thursday, with Dow E-minis up 0.23%, S&P 500 E-minis up 0.06%, and Nasdaq 100 E-minis down 0.76% as of 7:05 a.m. ET. Markets paused after this week's record-breaking rally, with investors monitoring Middle East peace deal developments.

Chip Sector Weakness

Despite issuing above-consensus revenue forecasts, semiconductor stocks declined sharply. Western Digital plunged 15.5% and SanDisk dropped 10.1% in premarket trading, despite both companies having surged 200% and 400% respectively year-to-date. Analysts attributed the sell-off to "extremely crowded" positioning and expectations for "outright acceleration" rather than merely excellent results.

The broader AI-memory sector unwound, with Micron Technology down 4.6%, while AMD, Marvell Technology, and Intel each lost over 1%.

Software Sector Declines

Software stocks broadly declined following mixed earnings. AppLovin dropped 18.7% after missing revenue estimates, while Datadog tumbled 22.3% post-earnings. Atlassian, Salesforce, Adobe, and Zscaler also fell sharply.

Bright Spots

Moderna rose 3.9% after FDA approval of its flu vaccine for people aged 50+. Megacaps showed resilience, with Meta and Amazon marginally higher, Alphabet up 0.5%, and Apple gaining 0.8%.

Market Context

The S&P 500 and Dow reclaimed record highs this week on strong tech earnings demonstrating AI monetization. The Nasdaq remains approximately 3% below all-time highs.

Fed Outlook

Fed rate expectations shifted, with September probabilities now closer to even between no change and a hike, compared to last week's 63% chance of an increase. Weekly jobless claims and Friday's July non-farm payrolls report remain key focus areas.