Wall Street Highlights: S&P 500, Nasdaq Fall From Record High as Market Awaits Iran's Reply

Among drivers he highlighted: a strong earnings season, news of Anthropic PBC's computing agreement with SpaceX to meet AI demand as both are large potential IPO candidates, and a steep rally in semiconductor stocks since late March.

In Thursday earnings news, Whirlpool Corp. sank 12% after the appliance maker slashed its earnings forecast and said that the Iran war amplified consumer cost of living concerns. Eye-glass purveyor Warby Parker Inc. jumped 23% after revenue beat estimates. Datadog Inc. soared 31% after raising its outlook.

Traders are looking to post-market results from Block Inc. In February, the financial technology company announced job cuts, which it described as a bet on AI. The focus will be on whether its "AI-enabled workforce reduction enhances productivity without compromising execution," Evercore ISI's Emanuel said.

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Labor-market indicators are also in focus as investor attention shifts to Friday's payrolls report and its potential influence on Federal Reserve interest-rate policy. Signs of strength could dim expectations for Fed easing.

Challenger, Gray & Christmas Inc. data on Thursday showed mounting tech-sector layoffs last month, raising the year-to-date total to a three-year high, even as overall private-sector job-cut announcements receded. Weekly initial jobless claims rebounded slightly after falling in the previous week to near the lowest levels in decades.

The "steady but not inflationary labor market" offers a silver lining for the Fed, Stephen Juneau, a Bank of America US economist, wrote in a Thursday note.

Sectors in Focus

• AI-spending-exposed firms as CoreWeave Inc. reports after the bell. CoreWeave is on a scorching run as demand for computing capacity keeps growing. 
• Software companies rallied as Datadog jumped, while semiconductor stocks fell, with the gap between the two sectors the widest in more than a year. Semis were pressured after Arm Holdings Plc's disappointing results sent shares down 10%. BTIG's Jonathan Krinsky said software stocks are "not dead yet," as the iShares Expanded Tech-Software Sector ETF, ticker IGV, still lags the jump in the VanEck Semiconductor, ticker SMH. 
• Banks, with Citigroup Inc. pitching investors on its strategy for the next several years. 
• Restaurants, with McDonald's Corp. steady as it sees a "meaningful" deceleration in second-quarter sales and Shake Shack tumbling 28% after its miss. Softer restaurant sales show there's "evidence of slowing consumers' spending in certain areas of discretionary spending," Renaissance Macro Research's Neil Dutta said. 
• Homebuilders as investors eye interest rates and the impact of a potential end to the war on the industry. If tensions relax, the focus may shift to "government initiatives to improve housing affordability," Citi analyst Anthony Pettinari writes. With FHFA head Bill Pulte hinting at a housing-related announcement, Pettinari sees a range of outcomes, "some of which could be positive for homebuilders (MBS purchases), while some could not (restrictions on share buybacks)." 
• Crypto stocks, with results from Coinbase Global Inc., the biggest US exchange, due after the close. Revenue is expected to have declined 27% year over year; investors will be listening for commentary on regulation and increasing competition.