Chip See-Saw Ride Hits Tech Heading into Jobs Data

Published as of: August 6, 2026, 9:17 a.m. ET

(Thursday market open) Chip stocks stumbled out of the gate, dragged by an outlook from Sandisk (SNDK) that appeared to disappoint. The chip weakness was contagious across almost the entire tech sector, creating a headwind for what had been the high-flying Nasdaq. The rest of Wall Street inched up early, buffered by reports that Iran and Oman might soon announce a deal to allow ships back through the Strait of Hormuz, though it's unclear if such a deal would satisfy the U.S.

This week all boils down to July nonfarm payrolls report at 8:30 a.m. ET tomorrow, and trading could be muted today. Consensus is for 86,000 new jobs and steady unemployment at 4.2%. One metric to check is labor market participation, which declined recently and could indicate a tougher jobs market than the unemployment rate shows. On the other hand, weekly initial jobless claims today of 199,000 stayed near record lows and July layoffs fell sharply from June to around 33,000, according to the Challenger job cuts report, the lowest in three years.

On Wednesday, consolidation slowed the booming four-day rally to record highs. Major indexes closed slightly higher to modestly lower as many large chip and AI names lost ground. Nvidia (NVDA) was an exception, giving the Dow Jones Industrial Average a boost after SpaceX (SPCX) said it will exclusively use Nvidia's chips for AI services. Other Magnificent Seven names fared less well, especially Alphabet (GOOGL), which dropped 4% as a key AI executive announced his departure.

1. Rally's staying power not in corporate hands: The rally to record highs reflected corporate strength investors knew heading into the month. Its ultimate fate could hinge on factors out of companies' control. Amazon (AMZN) and Microsoft's (MSFT) strong results, the evidence they showed of AI monetization, and their guidance for acceleration in cloud services growth initiated the snap back rally in tech and the AI complex, noted Nathan Peterson, director of derivatives research and strategy at the Schwab Center for Financial Research (SCFR). The technical picture has also improved, with the Nasdaq and Nasdaq-100^® (NDX) recently pushing above their 50-day moving averages. "Is it all clear from here? Of course not," Peterson said. "The Iran conflict and oil prices are still an unknown, as are the trajectory of yields and Fed policy. August and September seasonality is bearish, but the strong earnings and AI monetization 'healing' trumps those concerns, at least for now." One possible hindrance is that after this week, the earnings calendar slows quite rapidly with only Nvidia left to report among the Magnificent Seven. The rally has been earnings-driven.
    
2. Market metrics reverse toward strength: The Relative Strength Index (RSI) for the S&P 500 Index, a momentum indicator, has charged ahead dramatically since late July from below 40 to above 66. The late-July level was near areas typically seen as oversold. Now the RSI is approaching 70, traditionally the sign of an overbought market. Interestingly, the Nasdaq-100, which contains the largest tech stocks, remains relatively mild on the RSI front at 57, though up sharply from late last month as well. This could indicate churn underneath as software, chips, and "hyperscalers" all saw recent volatility. Speaking of which, the Cboe Volatility Index (VIX) remains at comfortably low levels below 16 for now, but the futures complex is in contango, meaning contracts later this year are priced higher, rising above 20 by November.. Another gauge, the Average Directional Index (ADX), remains below the 20 level that signals a trend forming, but at close to 19 is approaching that territory for the SPX. It's already there for the NDX.
    
3. High Treasury yields spark debate: Recent yield strength has bullish and bearish elements. While war-related inflation worries and the Fed's more dovish tone last week raised bond market concern, jobs and manufacturing numbers have generally impressed. Keep in mind that yields can rise on inflation concerns as well as on economic strength. The Atlanta Fed's GDPNow indicator—which tracks data as it arrives and isn't an estimate—is 6.2% for third quarter GDP. Yields are slightly lower this week amid peace hopes and lower oil, but solid jobs growth tomorrow could keep them elevated. One wild card is productivity. ADP's July private sector jobs report  manufacturers adding just 2,000 jobs. When output grows with fewer employees, that can be positive for GDP without as much inflation impact, possibly checking yields. Some good news came on that front this morning as preliminary second quarter productivity climbed 1.4% from the prior quarter versus the 0.8% consensus, and the government upwardly revised first quarter productivity growth to 0.8% from 0.3%. Though bond yields didn't slide immediately, it could be positive for the Treasury market, appearing to give Federal Reserve Chairman Kevin Warsh's theory about AI-boosted productivity gains a modest boost.

Bitcoin treasury companies in retreat: As of Tuesday, bitcoin treasury companies, once "buyers of last resort," had added only 720 bitcoins over the previous 30 days, according to Glassnode data. That's the smallest 30-day net total since November 2024, and only 1.7% of the total as of June 1. What's going on? The basic premise behind crypto treasury companies is that crypto prices will keep rising. Things get tricky when prices are falling, or languishing near the bottom of a bear market range. See Strategy's (MSTR) $8.2 billion second-quarter loss, which prompted the company to sell more than 3,500 bitcoin in July to help cover dividend and debt payments, abandoning founder Michael Saylor's "never sell" pledge. And other treasury companies are doing the same. So for now, bitcoin holders will have to look elsewhere for the market catalyst they crave, while perhaps drawing some comfort from the fact that the price has held up even as treasury companies have stepped away.

• Memory chip firms Western Digital (WDC) and Sandisk slid after reporting late Wednesday. Sandisk fell more than 9% ahead of the open as it guided for below-consensus quarterly revenue. Results from the last quarter, however, topped estimates. Western Digital plunged 5% despite topping expectations. It also raised consensus for fiscal first quarter earnings.
   
• Other memory names like SK Hynix (SKHY) and Micron (MU) got pulled down by the weakness in their competitors.
   
• Software shares, which sometimes trade opposite of chips, didn't escape the early carnage today. Adobe (ADBE) and Salesforce fell 3% to 4%.
   
• SpaceX (SPCX) climbed 3% before the open as investors awaited the expiration of a post initial public offering (IPO) lock-up set to free more than 900 million shares valued at around $100 billion. Despite the stock's struggles since its June IPO, many early investors sit on large gains and may be tempted to sell, possibly one reason shares are down almost 50% since the IPO.
   
• Constellation Energy (CEG) climbed 4% in early action despite quarterly revenue that missed analysts' expectations. Earnings per share topped consensus, however, and the company raised fiscal 2026 earnings guidance.
   
• AppLovin (APP) plunged 19% after Wells Fargo downgraded shares to equal weight from overweight, saying the company's market share in mobile games is plateauing.
   
• DoorDash (DOOR) delivered better-than-expected results, sending shares up 3% early. Total orders rose 27% year over year.
   
• Alphabet fell more than 4% on Wednesday. Jeff Dean, who's led much of the company's AI efforts, announced he's leaving to start his own company, Barron's reported. This makes Alphabet the latest large firm to lose a key leader to AI. This morning, Alphabet may have put pressure on the long end of the bond market, announcing plans for a benchmark sized debt deal in 10 parts.
   
• A 3% jump in gold and silver prices Wednesday was likely tied to a weaker dollar. The dollar fell after the U.S. and Japan moved earlier this week to support the yen. Mining companies Barrick Mining (BRK), Newmont (NEM), and Freeport McMoRan (FCX) rang up gains yesterday.
   
• Chances of a Federal Reserve rate hike next month are steady at 57%, according to the CME FedWatch Tool. This morning, the Financial Times reported that Fed Chairman Kevin Warsh "would be prepared" to raise rates if inflation readings in coming weeks are hot.

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Check out the investors' calendar for a summary of the top economic events and earnings reports on tap this week.

August 7: June nonfarm payrolls, hourly earnings, and unemployment rate. 
August 10: Expected earnings from Barrick Mining (B), Rocket Lab (RKLB), Hims & Hers Health (HIMS), and Ferguson Enterprises (FERG).
August 11: July existing home sales and expected earnings from Cardinal Health (CAH), Lumentum (LITE), CoreWeave (CRWV), and Super Micro Computer (SMCI).
August 12: July Consumer Price Index (CPI) and core CPI, and expected earnings from Nebius Group (NBIS), Cisco (CSCO), and Cerebras Systems (CBRS).
August 13: July Producer Price Index (PPI) and core PPI and expected earnings from Brookfield (BN), NetEase (NTES), JD.com (JD), Tapestry (TPR), Applied Materials (AMAT), and Nu Holdings (NU).