US Open: S&P 500 shows strength as semiconductor lags 🚩 Western Digital down 12%

Thursday's session on Wall Street opened on a relatively calm footing. Investors are simultaneously digesting another wave of quarterly earnings reports and monitoring developments in the Middle East, where negotiations over the potential reopening of the Strait of Hormuz remain ongoing. At the same time, a fresh batch of US economic data reinforced the resilience of the labour market while pointing to still-contained cost pressures.

Despite these supportive macroeconomic signals, risk appetite remains measured, with the major US indices trading close to the flatline. Individual stocks are attracting the most attention today, as investors continue to reward companies offering credible forward guidance rather than simply strong historical results. Sharp declines in Sandisk and Western Digital shares have not triggered broader selling across the semiconductor sector, although both stocks are clearly underperforming their peers.

US500 chart (H1)

Despite weakness in the Nasdaq, the US500 futures contract continues to display relative strength and remains above the 50-period exponential moving average (EMA50) at around 7,760 points. As long as this level holds, the base-case scenario continues to favour further upside.

Source: xStation5

S&P 500

The S&P 500 remains close to record highs, slipping just 0.2% during the previous session, highlighting the continued resilience of the broader US equity market. Since the beginning of the year, the index has gained 12.8%, while its 12-month return stands at approximately 22%, confirming that the longer-term uptrend remains intact. Valuations are more moderate than those of the Nasdaq 100, with the index trading at a trailing P/E ratio of 26.5, reflecting its broader sector diversification.

From a technical perspective, the S&P 500 is only 0.2% below its all-time high, while more than 70% of its constituents continue to trade above their 200-day moving averages, pointing to healthy market breadth. During the latest session, health care, materials and financial stocks outperformed, whereas communication services and energy weighed the most on overall performance. Despite the modest daily decline, market breadth remains constructive, suggesting that the recent weakness is more consistent with a technical pause than the beginning of a broader trend reversal.

Source: XTB Research

Nasdaq 100

The Nasdaq 100 remains close to record highs despite declining 0.8% during the previous session. On a weekly basis, however, the benchmark has advanced 8.4%, while year-to-date gains stand at 16.8%, reinforcing the strength of the longer-term bullish trend. Valuations remain demanding, with the index trading at a trailing P/E ratio of 31.5, as technology stocks continue to account for the largest share of its market capitalisation.

Technically, the Nasdaq 100 remains just 3.8% below its all-time high, while nearly 69% of its constituents are trading above their 200-day moving averages, indicating that the broader uptrend remains well supported. During the latest session, communication services and consumer discretionary stocks generated the greatest downside pressure, while the health care sector outperformed. Looking ahead, investors will be watching closely to determine whether the current pullback proves to be nothing more than a brief bout of profit-taking or develops into a more meaningful correction following the market's strong rally in recent months.

Source: XTB Research

The market heatmap illustrates that, despite a mixed trading session, the largest technology companies continue to have the greatest influence on overall index performance. Gains in Nvidia, Microsoft and Apple partially offset weakness in Alphabet, Broadcom and Micron, helping to limit downside pressure on the broader market. At the same time, positive returns across health care, financials and consumer staples suggest that market breadth remains healthy and that gains continue to be supported by a broad range of sectors.

Source: XTB Research

Key company news

Sandisk

Sandisk is among Thursday's biggest losers, with its shares falling around 13%. Although the company reported solid fiscal fourth-quarter results, they were not strong enough to meet the market's elevated expectations. In the current environment, investors are looking not only for robust earnings but also for convincing evidence of sustained future growth. Today's price action illustrates how even a modest disappointment can trigger a sharp sell-off in semiconductor stocks.

AppLovin

AppLovin shares are down approximately 16% following the release of mixed quarterly results. While several key metrics exceeded analysts' expectations, the overall report failed to convince investors. Technology companies continue to face particularly high scrutiny given their demanding valuations, meaning that even relatively minor disappointments can lead to aggressive profit-taking. Today's decline reinforces the market's exceptionally high expectations for the sector.

Restaurant Brands International

Restaurant Brands International, the owner of Burger King, Tim Hortons and Popeyes, delivered a solid quarterly earnings report. Earnings per share came in at $1.07, ahead of the consensus estimate of $1.03, while revenue reached $2.52 billion, broadly in line with market expectations. The standout performer was Burger King, where comparable sales increased by 8.5%. However, weaker results across the company's other brands limited investor enthusiasm, resulting in a relatively muted pre-market reaction.

Peloton Interactive

Peloton shares opened sharply lower, falling around 13%. The company's quarterly results were broadly in line with expectations, with revenue exceeding forecasts and earnings matching consensus estimates. However, investors remained concerned by the continued decline in paid subscribers, which fell 8.8% year-over-year. The shrinking subscriber base continues to represent the company's most significant long-term challenge.

Moderna

Moderna is among the strongest pre-market performers, gaining around 4%. The rally follows the US Food and Drug Administration's approval of the company's mRNA-based influenza vaccine, mFlusiva, for adults aged 50 and older. The approval marks an important milestone in Moderna's efforts to diversify its product portfolio beyond COVID-19 vaccines. Investors viewed the regulatory decision as a meaningful positive catalyst for the company's future revenue prospects.

IonQ

Quantum computing company IonQ is trading nearly 4% higher after reporting second-quarter results that exceeded market expectations. The company beat consensus revenue forecasts while also raising its full-year guidance to between $280 million and $290 million. The updated outlook stands comfortably above the FactSet consensus estimate of $268.6 million, reinforcing investor confidence in the long-term growth prospects of the quantum computing industry.

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Diageo

Shares of premium spirits producer Diageo are up around 7% after the company unveiled a new efficiency programme. Management aims to generate approximately $1.2 billion in cost savings over the next three years by implementing a more flexible and competitive operating model. Investors welcomed the initiative, viewing it as a meaningful step toward improving profitability amid slowing global alcohol consumption. Despite today's rally, Diageo shares remain only slightly above their level at the start of the year and continue to trade well below the record highs reached in late 2021.

Western Digital

Western Digital is another reminder that, during the current earnings season, strong historical results alone are no longer enough to satisfy investors. The company beat analysts' expectations for the fourth quarter, but market participants focused primarily on weaker-than-expected guidance for the first quarter of the new fiscal year. That disappointing outlook triggered a sell-off of nearly 18%, underscoring that forward guidance now carries significantly more weight than backward-looking earnings.

Western Digital (WDC.US) stock – D1 chart

Western Digital shares have retreated by around 40% from their all-time highs and opened today's session with a gap down of nearly 20%. Even so, the stock remains up almost 145% year-to-date, suggesting that the latest decline is more consistent with profit-taking following a strong rally than with a confirmed reversal of the longer-term trend.

Source: xStation5