US stocks continued to fall during the final hour of trading on Thursday, August 7, with the Dow Jones Industrial Average dropping over 400 points, putting an end to its five-day winning streak at risk. Traders are closely monitoring developments in the Middle East, as progress is being made on an agreement to reopen the Strait of Hormuz. Wall Street is also digesting a heavy flow of corporate earnings reports.

The Dow Jones fell by 407.22 points, a decline of 0.75%, to close at 53,941.90 points. The Nasdaq Composite dropped 15.54 points, or 0.06%, to 26,347.90 points, while the S&P 500 Index lost 10.00 points, or 0.13%, finishing at 7,713.55 points.

Salesforce shares declined by 3.8% after the company announced a leadership restructuring. Sandisk shares fell 5.1% as the storage company's fourth-quarter fiscal results failed to meet investor expectations. Additionally, AppLovin plunged 19% following mixed quarterly results, and Western Digital dropped 10% after its first-quarter fiscal outlook disappointed investors, despite fourth-quarter results exceeding forecasts.

"After a wave of active trading driven by earnings season, the market appears to be mostly taking a breather," said JJ Kinahan, head of retail expansion and alternative investment products at the Chicago Board Options Exchange. "Better-than-expected profits and sales, when paired with weak guidance, don't always push stock prices higher."

"Some profit-taking may also be at play," he added, noting that both Sandisk and Western Digital have surged significantly over the past year. In the last 12 months, Sandisk has skyrocketed by 3,000%, while Western Digital has soared over 530%.

Oil prices edged higher as markets focused on the Middle East, following reports that Iran and Oman are nearing an agreement to reopen the Strait of Hormuz. An Iranian government official told MS NOW that under the provisional deal, shipping through the strait would not involve fees or tolls.

"Markets have experienced many false dawns in this conflict," wrote Deutsche Bank strategist Jim Reid. "While details are becoming more concrete, the focus is shifting from whether an agreement can be reached to what the final arrangement will look like, including unresolved issues such as whether Iran will ultimately be allowed to charge tolls for ships using the strait."