(Updates to afternoon trading, adds analyst comments)

* Software stocks weighed down by AppLovin ( APP ), Datadog ( DDOG ) results

* SpaceX finds footing as investors eye lockup expiry

* Key nonfarm payrolls data due on Friday

* Indexes: Dow down 0.71%, S&P down 0.07%, Nasdaq up 0.04%

By Chuck Mikolajczak and Shashwat Chauhan

NEW YORK, Aug 6 (Reuters) - U.S. stocks dipped on Thursday,

pausing after a strong start to the week, as investors digested

the latest round of corporate earnings and looked for signs of

progress toward a peace deal between the U.S. and Iran.

A robust earnings season, which has tempered some concerns

about the massive spending by AI-related companies, and growing

optimism over possible progress toward a peace deal in the Iran

war helped propel both the Dow Industrials and S&P 500 to record

highs earlier this week.

Oil prices rose, with U.S. crude up 2.75% at $77.29 a

barrel and Brent at $82.35 per barrel, up 3.65%. Iran's

semi-official Fars news agency reported that an Iranian

parliamentary committee is reviewing a preliminary bill that

would bar U.S., Israeli and other "hostile" vessels from

transiting the Strait of Hormuz.

"You're seeing perhaps more muted response to macro news

than you would otherwise see, probably due to the fact of the

summer and a little bit of fatigue, there's a little bit of

headline fatigue, specifically around Iran," said Robert

Bernstone, head of trading at SummitTX Capital in New York.

"Iran is having less of an impact right now, to be clear,

I'm not saying it has no impact ... tweets are something,

headlines are something, but we really want to see the devil is

in the details."

The recent indications of movement toward a peace deal

helped push crude prices lower earlier in the week and, in turn,

eased inflation worries and expectations for a rate hike from

the Federal Reserve, which also served to push U.S. Treasury

yields lower.

Data storage company Western Digital ( WDC ) tumbled nearly 11%

and memory chip maker Sandisk ( SNDK ) dropped more than 4% in

the wake of quarterly results. Both companies have surged this

year, however, with Sandisk ( SNDK ) up more than 400% and Western

Digital ( WDC ) up about 170%.

AppLovin ( APP ) plunged more than 18% after the marketing

platform missed Wall Street estimates for quarterly revenue,

while Datadog ( DDOG ) plummeted about 17% after the cloud

security firm said it expects revenue growth to slow in the

third quarter. Both stocks were among the biggest drags on the

benchmark S&P index.

The Dow Jones Industrial Average fell 387.67 points,

or 0.71%, to 53,961.45, the S&P 500 lost 5.72 points, or

0.07%, to 7,718.05 and the Nasdaq Composite gained 11.48

points, or 0.04%, to 26,374.92.

SPACEX LOCK-UP PERIOD EXPIRES

SpaceX shares erased losses from earlier in the session

and were up nearly 2%, defying expectations that they would be

pressured by insider selling, as the lock-up period for early

investors holding the stock expired.

On the data front, the number of Americans filing claims for

unemployment benefits increased slightly last week.

The report came ahead of closely watched nonfarm payrolls

figures for July due on Friday, which could be key in assessing

the Federal Reserve's future interest rate path at a time when

Chairman Kevin Warsh has scaled back on forward guidance from

the central bank.

Declining issues outnumbered advancers by a 1.46-to-1 ratio

on the NYSE and by a 1.35-to-1 ratio on the Nasdaq.

The S&P 500 posted 29 new 52-week highs and four new lows

while the Nasdaq Composite recorded 119 new highs and 63 new

lows.