US Stocks Pull Back from Highs: Storage Giants' "Better-than-Expected" Earnings Lead to Sharp Declines, Hormuz Strait Agreement Becomes New Variable

On the morning of August 7 (Beijing time), US stocks on Thursday (US Eastern Time August 6) fluctuated lower, with the three major indices collectively pulling back gains near historical highs. By midday, the Dow Jones Industrial Average fell 368.11 points, or 0.68%, to 53,981.01 points; the Nasdaq Composite Index fell 41.35 points, or 0.16%, to 26,322.09 points; the S&P 500 Index fell 20.30 points, or 0.26%, to 7,703.25 points.

There was no single bearish factor dragging down the market, but rather the result of multiple factors intertwined: the earnings season entered the most intensive disclosure stage, with "report cards" from several star companies mixed; in the Middle East direction, positive signals emerged from Iran and Oman's negotiations on the Hormuz Strait reopening agreement, with oil prices rising slightly; combined with the Dow continuously hitting new highs and the S&P 500 first breaking above the 7,700-point level, profit-taking pressure was naturally released.

Earnings Season "Face-Change": Why Storage Giants' Better-than-Expected Results Led to Selling

The biggest focus of the day's market was undoubtedly the "diving" of the storage chip sector again. SanDisk (Sandisk) fell 5.1%, Western Digital plunged 10%, and AppLovin plummeted 19% due to mixed quarterly results, while Salesforce also fell 3.8% due to announcing leadership restructuring.

Notably, this was not a typical "earnings disaster." Just after the market close on US Eastern Time August 5, the two storage giants delivered what could be described as explosive earnings: SanDisk's FY2026 Q4 revenue reached $8.965 billion, a year-over-year surge of 372%, higher than the market expectation of $8.394 billion; adjusted EPS was $39.25, about 135 times the same period last year, with an adjusted gross margin as high as 84.6%; the company also announced that its board intends to approve a new $14 billion stock buyback plan. Western Digital's同期 revenue was $3.747 billion, a 44% year-over-year increase, with net profit surging more than 12 times, and adjusted EPS of $3.56, also exceeding expectations.

However, the bright data led to consecutive declines after market close and the next day. Wall Street institutions generally pointed to "earnings guidance": SanDisk expected next quarter revenue between $10.3 billion and $10.8 billion, with a midpoint below Wall Street's consensus expectation of $10.82 billion; Western Digital's revenue forecast for FY2027 Q1 was $4 billion to $4.2 billion, also failing to meet market high expectations.

The Price of High Beta: Rose the Most, Fell the Hardest

Barron's pointed out that SanDisk's disappointing earnings outlook overshadowed its strong quarterly performance. Bloomberg statistics showed that SanDisk's stock has risen about 469% so far in 2026, and surged more than 3,100% over the past 12 months, with the number of days with single-day gains or losses exceeding 10% reaching 31 times this year. Larry Tentarelli, chief technical strategist at independent research firm Blue Chip Daily, bluntly stated: "The market is currently very volatile, and I wouldn't be surprised if SanDisk's stock rises or falls 10% or 15% after earnings release."

The explanation from Dave Mazza, CEO of Roundhill Financial, is more representative: the storage fundamentals are at their best level in a decade, but market expectations have also been fully reflected; SanDisk and Western Digital are typical high-beta stocks in the storage sector, with the greatest elasticity during the upcycle and the most severe declines when sentiment turns. Data shows that since hitting its all-time high on June 18, Western Digital's stock has fallen 27.1%; the Philadelphia Semiconductor Index (SOX) in July experienced its worst monthly performance since 2008, with a 21% decline.

Wall Street's "Appetite" Becomes Stricter: Good Earnings Are No Longer a Talisman

From Salesforce, AppLovin to SanDisk, Western Digital, multiple cases this week point to a phenomenon: after the valuation expansion driven by the AI narrative, the market's "tolerance" for earnings is systematically decreasing—even if revenue and profits both exceed expectations, the stock price may still suffer a heavy blow if guidance is not strong enough.

JJ Kinnahan, head of CBOE retail expansion and alternative investment products, commented on this: "After a wave of active trading driven by earnings season, the market seems to be mostly resting. Better-than-expected profits and sales, paired with weak guidance, don't always push up stock prices." He added that some profit-taking is also at play—SanDisk's stock has surged about 3,000% over the past 12 months, and Western Digital's gains have also exceeded 530%, so any breeze or grass movement could trigger profit-taking.

However, the long-term logic has not been negated by institutions. Of the 30 analysts tracked by Bloomberg, 25 still give SanDisk a "buy" rating, with an average target price as high as $2,433, implying about 70% upside in the next 12 months; its P/E ratio is about 7 times expected earnings for the next 12 months, lower than the historical average of 11 times since listing. SanDisk CEO David Geckler revealed that the company has shifted its sales model from quarterly purchase agreements to long-term agreements with an average term of four years, signing eight contracts with six customers with a total value of at least $93.9 billion, locking in capacity certainty for the next two years.

Hormuz Strait Agreement: New Variable for Oil Market and Risk Assets

Geopolitically, oil prices rose slightly as Iran and Oman approached an agreement to reopen the Hormuz Strait. An Iranian government official stated that under the interim agreement, no fees or tolls will be charged for shipping through the strait. Earlier, Iranian Foreign Ministry Spokesperson Baghaei said on the 5th that the two sides have had "professional and progressive" negotiations over the past two months on safe shipping routes for commercial vessels, reaching agreement on the proposed new route's geographical coordinates, with the joint statement entering the final review stage; but he emphasized that reaching an agreement does not mean the Hormuz Strait will resume safe navigation.

Deutsche Bank strategist Jim Reed warned: "In this conflict, the market has experienced several false dawns. Although details are becoming more specific, the focus is shifting from whether an agreement can be reached to what the final arrangement will look like—including unresolved issues such as whether Iran will ultimately be allowed to charge tolls for ships using the strait." Foreign media reports also mentioned that Iran and Oman may charge service fees for transit ships and share revenue on a 50-50 basis, with relevant details still being finalized.

Weekly Review: From Historical Highs to High-Level Fluctuations

Looking back at this week, US stock performance can be described as "icy and hot." On Monday (US Eastern August 3), driven by strong AI company earnings and expectations of Middle East situation easing, the Dow surged 907.47 points (+1.71%), breaking the 54,000-point barrier for the first time in history, closing at 54,085.88 points; the S&P 500 index rose 1.79% to 7,736.52 points, refreshing its historical closing record for the first time since June; the Nasdaq rose 2.59% to 26,584.99 points, with the Nasdaq 100 soaring 3.3% in a single day, the largest single-day gain since May 2025.

On Wednesday (US Eastern August 5), the Dow rose another 0.49% to close at 54,349.12 points, setting another new high, but the Nasdaq fell 0.83% and the S&P 500 fell 0.17%, showing clear divergence in the uptrend: NVIDIA rose 3.43% to a new high, Google A fell more than 4%, SpaceX plummeted 13.61%, with market capitalization evaporating about $225.2 billion, and AMD fell more than 7%. Meanwhile, COMEX gold surged 3.74%, recovering to $4,308/oz, and the US dollar index fell to around 99.68, with safe-haven and profit-taking sentiment coexisting. In terms of sectors, bank stocks rose across the board, airline stocks generally rose, while oil stocks fell collectively, and most Chinese concept stocks weakened, with the Nasdaq Golden Dragon China Index falling 1.09%.

Southeast Asian Investor Perspective: Allocation Thinking During High-Level Fluctuation Period

For Thai and Southeast Asian investors, fluctuations in US stocks near historical highs do not mean a trend reversal, but rather a signal to re-examine positions and expectations. On one hand, the prosperity of the AI industry chain and storage sector continues, with cloud computing giants' earnings confirming that AI capital expenditures remain strong, and SanDisk's long-term agreement model also shows demand-side resilience; on the other hand, the volatility of high-level stocks has significantly increased, and the "earnings kill" risk during earnings season cannot be underestimated.

Industry insiders suggest that against the background of US stock valuations at historically high levels and unclear Fed policy paths, Southeast Asian capital can focus on three directions: first, diversify allocation through US stock ETFs and index funds to reduce the volatility impact of single high-beta stocks; second, during earnings season, pay more attention to guidance quality rather than simply year-over-year growth rates; third, closely follow the fluctuations in the Hormuz Strait situation—any variables in this global energy lifeline could be transmitted to inflation expectations through oil prices, affecting the Fed's rate cut rhythm and global risk asset pricing.

Overall, after hitting new highs, US stocks have entered a consolidation period, which can be seen as a "technical rest" in the bull market. What truly determines the future direction is still the quality of earnings to be intensively disclosed in the coming weeks, inflation and employment data, and the final implementation plan for the Middle East situation. For Southeast Asian investors, instead of chasing short-term fluctuations, it's better to optimize structure during fluctuations and wait for clearer directional signals.