Eight worst movers were all software. Futures still point higher

The eight worst performers among the roughly 100 large caps in our feed on Wednesday were all enterprise software or security names — and the index still closed higher, with 68 of the 100 large caps in our feed up on the day. This is a rotation inside the market, not a retreat from it.

Beating estimates stopped working, for one sector only

MongoDB (MDB) closed at $375.40, down 13.54% from Tuesday’s $434.21. It had reported fiscal 2027 second-quarter revenue of $772 million, up 30% year over year, and adjusted earnings of $1.90 a share, up 90%. Analysts had been looking for revenue of about $734 million and adjusted earnings of $1.61. The company then raised full-year guidance to roughly $3 billion in revenue and $6.49 in adjusted earnings — growth of 22% and 31% at the midpoints. Every line beat. The stock lost an eighth of its value.

Palo Alto Networks (PANW) closed at $328.48, down 9.28%, its worst two-day stretch since February 2024. Revenue grew 34% and fiscal 2027 guidance came in above the Street, but gross margin landed at 74.8%, down 100 basis points year over year, management said cloud hosting costs will grow faster than revenue this fiscal year, and the full-year free cash flow margin outlook of 37.5% to 38% sat below what buy-side accounts were carrying. The company also reported a GAAP net loss of $282 million, driven by stock-based compensation, acquisition costs and fair-value adjustments on its notes.

The rest of the group went with them without reporting anything at all. Datadog (DDOG) fell 6.53% to $209.23, Palantir (PLTR) 5.81% to $169.46, CrowdStrike (CRWD) 5.42% to $203.42, Cloudflare (NET) 4.47% to $272.74, Snowflake (SNOW) 4.37% to $305.84 and ServiceNow (NOW) 4.32% to $136.72. Those eight names are the eight largest decliners in the feed. The ninth, Prologis, fell 2.21%.

What is being marked down is the multiple, not the business. MongoDB traded near 63 times forward earnings into the print. When the discount rate rises, the price paid for growth that arrives in 2029 falls before the growth itself does — and a beat does not fix that.

The same day, the AI hardware complex rose

Dell (DELL) closed at $492.18, up 15.98% and the largest gainer of any size in our movers feed, on volume of about 36.6 million shares. It had reported record quarterly revenue of $47 billion, up 58%, booked a record $60.9 billion in AI server orders, exited the quarter with a $95 billion backlog, and raised full-year guidance to $192 billion in revenue and $25.50 in adjusted earnings per share from $167 billion and $17.90.

Nvidia (NVDA) rose 3.21% to $224.41 on 156.7 million shares, the heaviest volume in the feed. Micron (MU) gained 2.43% to $956.08, Qualcomm (QCOM) 2.01% to $169.96, Intel (INTC) 1.21% to $90.05. Advanced Micro Devices (-0.55%) and Broadcom (-0.66%) were roughly flat.

Oracle (ORCL) is the cleanest illustration of the sorting. It fell 5.2% on Tuesday with the software complex and rose 3.13% on Wednesday to $145.75 with the hardware complex. Nothing about the company changed between those two sessions; what changed is which bucket the market decided it belongs in.

Consumer internet went the same way: Reddit (RDDT) rose 9.31% to $158.10, the largest gain among the mega- and large-cap names, and Meta (META) added 2.47% to $592.85. Fintech rebounded hard from Tuesday’s selloff — Affirm (AFRM) 5.93%, Block (SQ) 5.88%, PayPal (PYPL) 4.33%, Robinhood (HOOD) 3.36%.

Oil is repricing bonds, not energy shares

Brent crude traded near $95 a barrel on Wednesday, close to a six-week high, after fresh US strikes on Iranian targets near the Strait of Hormuz. The US 10-year Treasury yield sat near 4.8%, around its highest since late 2023, and fed funds futures put the odds of a quarter-point hike at the September 15–16 FOMC meeting above 66% — up from a 35% to 57% range a week ago, following Fed Chair Kevin Warsh’s hawkish Jackson Hole remarks.

Here the data disagrees with the story being told about it. If the market genuinely expected $95 crude to persist, the energy majors would be the obvious beneficiary. They were not. Exxon Mobil (XOM) fell 0.24% to $164.15 and Chevron (CVX) rose 0.35% to $211.78 — both essentially unchanged on a day crude sat near a six-week high, and both giving back part of Tuesday’s move, when they rose 2.2% and 2.4%. Energy equities are pricing a supply scare that resolves; the bond market is pricing an inflation impulse that does not. Only one of those can be right, and today’s services data is the first real test of which.

Where the market opens from

The S&P 500 closed Wednesday at 7,666.60, up 0.46%; the Nasdaq Composite at 26,217.83, up 0.45%; the Dow at 53,061.95, up 295.07 points or 0.56%. All three snapped a three-day losing streak.

Ahead of the open, S&P 500 futures were at 7,685.00, up 0.11%; Dow futures at 53,210.00, up 0.17%; Nasdaq 100 futures at 29,238.00, up 0.18%. European futures were flat to marginally lower, with the Euro Stoxx 50 down 0.08% and the STOXX 600 down 0.02%. Overnight after-hours prints on Wednesday’s biggest movers were small: Nvidia at $225.35, Palo Alto at $330.32, Dell at $485.83.

What to watch today

8:30 AM ET — Initial jobless claims. Consensus near 205,000 against 203,000 prior.
8:30 AM ET — July trade balance. Consensus near -$71.2 billion against -$73.26 billion prior.
8:30 AM ET — Q2 final productivity and unit labor costs. Consensus 0.3% and 1.8%. Unit labor costs are the line that feeds the inflation argument directly.
9:45 AM ET — S&P Global services PMI. Consensus near 56.8.
10:00 AM ET — ISM services index. Consensus 54.5 against 54.1 prior. With a hike priced at better than two-thirds, this is the release most likely to move rates today.
Before the open — Ciena (CIEN) reports fiscal third-quarter results; consensus revenue near $1.64 billion.
After the close — Lululemon (LULU) reports fiscal second-quarter results.

Not financial advice. iTrading Buddy summarizes publicly available market data and news; every figure above is sourced from the reporting available before the US open on the date shown. Verify anything you act on.