(Adds trading volume, market breadth)

* 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 off: Dow 0.85%, S&P 500 0.18%, Nasdaq 0.06%

By Chuck Mikolajczak and Shashwat Chauhan

NEW YORK, Aug 6 (Reuters) - U.S. stocks finished the trading

session lower 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 the potential end of hostilities 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 settling up 2.75% at

$77.29 a barrel and Brent settling at $82.49 per barrel,

up 3.83%. 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 Dow Jones Industrial Average fell 464.02 points,

or 0.85%, to 53,885.10, the S&P 500 lost 13.52 points, or

0.18%, to 7,710.03 and the Nasdaq Composite lost 15.09

points, or 0.06%, to 26,348.35.

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.

WESTERN DIGITAL ( WDC ), SANDISK DROP

Data storage company Western Digital ( WDC ) tumbled 13% and

memory chip maker Sandisk ( SNDK ) dropped 6.8% in the wake of

their quarterly results. Both companies have surged this year,

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

about 160%.

AppLovin ( APP ) plunged 19.7% after the marketing platform

missed Wall Street estimates for quarterly revenue, while

Datadog ( DDOG ) plummeted 19% 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.

Of the 382 companies in the S&P 500 that have reported

earnings through Wednesday morning, 84.8% have topped analyst

expectations, according to LSEG data, well above the 68% average

beat rate since 1994.

SPACEX LOCKUP PERIOD ENDS

SpaceX shares erased losses from earlier in the session

and closed 6.1% higher, defying expectations that they would be

pressured by insider selling, as the lockup 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 will shape expectations for the Fed's path

for interest rates at a time when Chairman Kevin Warsh has

scaled back on forward guidance from the central bank.

Declining issues outnumbered advancers by a 1.57-to-1 ratio

on the NYSE and by a 1.38-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 131 new highs and 82 new

lows.

Volume on U.S. exchanges was 17.09 billion shares, compared

with the 17.42 billion average for the full session over the

last 20 trading days.