What Happened?
A number of stocks fell in the morning session after a surprisingly weak U.S. jobs report was released, fueling concerns about a slowing economy.
The U.S. economy added only 73,000 jobs, falling significantly short of economists' expectations, while figures for May and June were revised down, erasing 258,000 previously reported jobs. The professional and business services industry itself shed 14,000 jobs. This data points to a cooling labor market, fueling concerns of a slowing economy. A weaker economic outlook often leads to reduced corporate spending on key services like IT consulting and professional staffing, which directly impacts the sector's revenue and growth prospects. The report immediately increased investor expectations of an interest rate cut by the Federal Reserve.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Safety & Security Services company GEO Group (NYSE:GEO) fell 3.1%. Is now the time to buy GEO Group? Access our full analysis report here, it’s free.
- Hardware & Infrastructure company Super Micro (NASDAQ:SMCI) fell 3.3%. Is now the time to buy Super Micro? Access our full analysis report here, it’s free.
- Hardware & Infrastructure company IonQ (NYSE:IONQ) fell 3%. Is now the time to buy IonQ? Access our full analysis report here, it’s free.
- Government & Technical Consulting company Amentum (NYSE:AMTM) fell 3.3%. Is now the time to buy Amentum? Access our full analysis report here, it’s free.
- Electronic Components & Manufacturing company Flex (NASDAQ:FLEX) fell 3.1%. Is now the time to buy Flex? Access our full analysis report here, it’s free.
Zooming In On Super Micro (SMCI)
Super Micro’s shares are extremely volatile and have had 87 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 4 days ago when the stock gained 7.2% as investor optimism continued to grow ahead of its upcoming earnings report and continued strength in the artificial intelligence sector. The AI server maker announced it would release its fourth-quarter results on August 5, with investors anticipating positive news. The stock's climb was also supported by the broader boom in demand for artificial intelligence infrastructure, which benefited companies in the sector. Adding to the positive sentiment, institutional investors showed increased confidence in the company. For example, TCW Group Inc. acquired a new stake valued at approximately $7.36 million during the first quarter. This investor enthusiasm came as the stock built on recent momentum, having already gained significantly over the past month.
Super Micro is up 87.4% since the beginning of the year, but at $56.32 per share, it is still trading 16.2% below its 52-week high of $67.22 from July 2024. Investors who bought $1,000 worth of Super Micro’s shares 5 years ago would now be looking at an investment worth $18,581.
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