WS #13496

The post-market earnings dump continues to dominate, with a clear bifurcation between AI/software names facing high expectations and those with fundamental beats. AppLovin (APP) tumbled ~21-22% after hours on a minor revenue miss and soft Q3 guidance despite +53% YoY growth, reinforcing the 'sell the news' pattern seen in SanDisk (SNDK) and HubSpot (HUBS). Duolingo (DUOL) fell over 11% on soft Q3 revenue guidance despite strong user growth, and Figma (FIG) fell despite a beat-and-raise, while Axon (AXON) slipped 5.7% on weaker profitability. In contrast, several names rallied on beats: Block (XYZ) raised FY26 EPS guidance to $4.02 (vs $3.89 est) and saw shares trade up initially, though bitcoin gross profit fell 31% after Cash App fee cuts; e.l.f. Beauty (ELF) crushed estimates (EPS $1.75 vs $0.72 est); CACI International surged on a strong FY27 outlook; and Redwire (RDW) rose on record backlog. The Fed narrative is stable: Governor Lisa Cook reiterated readiness to raise rates if inflation doesn't slow, with the Fed holding at 3.5%-3.75% — a hawkish tilt that could weigh on growth stocks. Geopolitically, the US-Iran Hormuz deal talks are in 'final' stages per Al Jazeera, with Kalshi odds rising to 27%, and Houthis claimed a missile strike on a Saudi oil vessel in the Gulf of Aden, keeping oil risk elevated. Additionally, the US suspended government activities in Michoacán, Mexico, threatening avocado imports, and Indiana Governor Braun waived gasoline taxes for 30 days citing Ukrainian attacks on Russian oil refineries. Overall, the earnings-driven moves are the primary signal, with a bifurcation between AI/software names facing high expectations and those with clear fundamental beats.