Newsletter · · Ashutosh Agarwal

Software's Ugly Earnings Day Punished Even the Beat and Raise Names - Daily Market Wrap - Thursday, August 6, 2026

The session of Thursday, August 6, 2026: Datadog, AppLovin, HubSpot and Figma all cratered on earnings even as the S&P 500 printed a fresh 52-week high intraday, while the Dow shed 464 points on Honeywell Aerospace's brutal standalone debut and a Fed that has quietly stopped cutting.

Daily Market Wrap

Thursday, August 6, 2026: Software's Ugly Earnings Day Punished Even the Beat and Raise Names

Datadog, AppLovin, HubSpot and Figma all cratered on their earnings even as the S&P 500 sat within a whisker of a record, while the Dow sank on Honeywell Aerospace's brutal standalone debut and a Fed that has quietly stopped cutting.

Where the day closed

  • S&P 500: 7,711.38, -0.16%, but it printed a fresh 52-week high (7,742.85) intraday before fading.
  • Nasdaq Composite: 26,348.35, -0.06%, essentially flat.
  • Dow Jones Industrial Average: 53,885.10, -0.85% (-464 points), the clear laggard.
  • Russell 2000 (small caps): 3,001.55, -0.58%.
  • VIX (the "fear gauge", where higher means investors are paying up for protection): 15.15, -4.17%. Low and calm.
  • 10-year Treasury yield: ~4.67%, up about 5 basis points (a basis point is one-hundredth of a percentage point). The 2-year rose to ~4.24%.
  • Best sector: Technology +1.48%, the only meaningfully green group. Worst: Utilities -2.25%, with other bond-proxy defensives (Consumer Staples -1.14%, Real Estate -1.06%) sold as yields climbed.

The tape told two stories at once: a handful of expensive software names got taken to the woodshed on earnings, while cheap-money-sensitive corners quietly sold off and semiconductors held the Nasdaq together.

Big Story 1: A "beat-and-raise" earned you a 19% haircut

The single biggest money-mover today wasn't a macro headline. It was a wall of software earnings that all landed the same way: fine results, punishing reactions. The important nuance is that this was not a tech-wide crash. The Technology sector actually finished up 1.48% on the day. The damage was surgical, aimed at high-priced growth names where merely doing well wasn't good enough.

What happened. Six richly-valued software and "physical-AI" names fell double digits:

  • Datadog (DDOG) -19.03% to $229.29, even though it beat and raised. Q2 revenue grew 36% to $1.12B, topping estimates, and it lifted its full-year outlook.
  • AppLovin (APP) -19.66% to $335.67, a rare miss. Revenue rose 53% to ~$1.92B but came in just under estimates, and profit landed below its own guidance, described by analysts as its first shortfall in twelve quarters.
  • HubSpot (HUBS) -19.10% to $202.43, beat on the quarter but cut its full-year revenue outlook and added only ~7,000 net customers versus the 9,000 to 10,000 hoped for.
  • Figma (FIG) -14.85% to $23.97, grew 48% and raised guidance, but at roughly 8x sales, a good number still wasn't enough.
  • Axon (AXON) -14.28% to $522.46, its 10th straight quarter of 30%+ growth and a raised outlook, undone by flat profit margins.
  • Symbotic (SYM) -14.88% to $39.60, beat on revenue but missed on earnings and pushed key catalysts out to 2028.

Why it happened. Two forces, both about AI. First, the bar is impossibly high. After a huge run, these stocks were priced for perfection, so any hint of slowing forward growth hurts ("beat-and-raise" means beating the quarter and raising the outlook; when the "raise" underwhelms, the stock still drops). Second, AI is now both the bull case and the near-term tax. At Datadog, the largest AI customer is cutting its usage starting next quarter. At HubSpot, customers are scrutinizing budgets as unpredictable AI costs eat into spending. At Figma and AppLovin, the cost of running AI models ("inference", the computing bill every time the AI is used) is squeezing profits before the revenue shows up.

What people said.

  • Datadog CEO Olivier Pomel explained the choice to absorb the hit from its biggest customer upfront:

we did choose to fully de-risk our largest customer... if you backed out our largest customer from our growth, you get pretty much the same growth rate as the rest of the business.

  • HubSpot CEO Yamini Rangan was blunt about the slowdown: "April got off to a slow start and the quarter we expected did not fully materialize." Her CFO Kate Bueker added that guidance now "reflects our expectation that the headwinds we saw in Q2 will persist throughout the remainder of the year," killing hopes of a 2026 re-acceleration.
  • AppLovin CEO Adam Foroughi owned the stumble: "this quarter, we fell short of that standard," pinning it on model improvements that were "lighter than normal" with the next big step landing just after the quarter closed.
  • The analyst reaction told you it was about expectations, not fundamentals. Piper Sandler actually raised its Axon target (to $732) and called the drop a chance to be "a buyer on this pullback." KeyBanc's Jackson Ader summed up HubSpot: "Any hopes of re-acceleration have been officially dismissed for the year."

The read-through: in this market, an expensive software stock has to clear a bar that keeps rising, and "AI will pay off eventually" is no longer a free pass while the costs land today.

Big Story 2: Why the Dow fell 464 points while the S&P sat near a record

Under the calm index headline was a genuine split, and it explains why the Dow dropped 0.85% while the S&P barely budged.

What happened. The Dow is price-weighted, meaning a stock's dollar price (not the size of the company) drives its impact, so a big drop in a high-priced blue chip can strip hundreds of points off the Dow while barely denting the broader, company-size-weighted S&P 500. Today the culprit was Honeywell Aerospace (HONA), down 23.16% to $156.47. This was its first earnings report as a standalone company after being spun out of the old Honeywell in late June, and it was a rough debut: adjusted profit of $1.87 missed the ~$2.12 expected, revenue of $4.52B came up short, and management cut its full-year organic growth outlook to 4 to 5%, down from 7 to 9%. (Note: HONA itself isn't in the Dow, the parent it split from is, but the sympathy hit and the read-across to industrials weighed on the price-weighted index.)

Why it happened. Two things beyond Honeywell. First, rates backed up. With the 10-year Treasury yield rising to ~4.67%, the market's most rate-sensitive, dividend-heavy "bond substitutes" got sold, and Utilities fell 2.25%, the worst group on the day. Second, the macro backdrop has quietly hardened. Under new Fed Chair Kevin Warsh (who took over in May), the Fed held rates at 3.50 to 3.75% at its July 29 meeting in a 9 to 3 vote, with the three dissenters, Cleveland's Beth Hammack, Minneapolis' Neel Kashkari and Dallas' Lorie Logan, all wanting a rate hike. Rate cuts for 2026 have essentially been priced out. A bounce in oil on Middle East and Strait of Hormuz headlines added to the inflation-nerves backdrop.

What people said. Honeywell Aerospace CEO Jim Currier framed the miss as a supply problem, not a demand one: "Secular trends across our end markets remain strong while supply constraints limited output growth in the quarter." The Street was less forgiving. UBS's Gavin Parsons cut his target and said the miss was "pushing the story further into a 'show-me' phase." On the economy, the day's data actually ran hot, not cold: weekly jobless claims fell to 199,000, a third straight week below 200,000 and the strongest such streak since 1969, reinforcing the "higher-for-longer" case just as everyone waits on Friday's July jobs report.

Quick Hits

  • The other side of the software trade, semis and beat-and-raises ripped. SiTime (SITM) +26.58% to $687.50 after Q2 sales more than doubled (+127%) and it guided next quarter (~$285 to 295M) far above the ~$220M expected; CEO Rajesh Vashist touted the newly-closed Renesas timing-chip acquisition. MACOM (MTSI) +14.49% on a Q4 revenue guide ~14% above the Street.
  • Paycom (PAYC) +23.55% to $215.97, one of its biggest top-line beats ever and a raised outlook; management now sees free cash flow topping $650M versus the ~$495M analysts had modeled. CEO Chad Richison: "our strong second-quarter results came in ahead of expectations... we are raising our full year outlook."
  • Insmed (INSM) +33.86% to $132.55, the day's biggest gainer. The biotech beat on revenue and raised its long-term peak-sales forecast; CEO Will Lewis said its three lead drug programs "will generate more than $14 billion in combined peak sales."
  • CACI International (CACI) +21.38%, the defense-IT firm's next-year guidance blew past both estimates and its own three-year targets. Chime (CHYM) +20.56%, fifth straight beat-and-raise since its IPO and a second quarter of GAAP profit, shrugging off news that its CFO steps down tomorrow. Unity (U) +15.05%, CEO Matt Bromberg called it "arguably the best quarter in Unity's history as a public company," powered by its Vector AI ad engine.
  • UWM Holdings (UWMC) -34.78% to $1.20, the mortgage lender suspended its dividend, gutting the shares.
  • SanDisk (SNDK) -6.81% to $1,258.58, beat on the quarter but soft forward guidance, the same "good-but-not-enough" pattern rippling through memory chips.
  • VIX at 15.15 and the S&P near a record say complacency, but the internals were narrow: a semis-and-mega-cap tape holding up an index while everything rate-sensitive quietly bled.
  • Watch Friday: July nonfarm payrolls land tomorrow morning, the next real test of the "economy is fine, so the Fed can stay put" story that's holding stocks near records.

Data reflects the regular-session close on Thursday, August 6, 2026, with company results and analyst commentary from the named sources as attributed.