What Happened?
A number of stocks jumped in the afternoon session after the July jobs report showed an unexpected loss of 23,000 jobs, signaling a cooling labor market. Economists had forecast a gain of around 80,000 nonfarm payrolls.
According to the U.S. Bureau of Labor Statistics, the unemployment rate held steady at 4.1%. This weaker-than-expected data led investors to bet on the possibility of an interest rate cut by the Federal Reserve. The logic, often described as "bad news is good news" for the market, suggests that a slowing economy could deter the central bank from further rate hikes, and potentially encourage cuts to stimulate growth. This outlook generally makes borrowing cheaper for companies and increases the relative attractiveness of stocks.
Lower rates are particularly beneficial for growth companies because they reduce the discount rate applied to future earnings, boosting the present value of cash flows that extend further out.
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:
- Social Networking company Reddit (NYSE: RDDT) jumped 6.4%. Is now the time to buy Reddit? Access our full analysis report here, it’s free.
- Law Enforcement Suppliers company Axon (NASDAQ: AXON) jumped 4.4%. Is now the time to buy Axon? Access our full analysis report here, it’s free.
- Infrastructure Distributors company Watsco (NYSE: WSO) jumped 2.7%. Is now the time to buy Watsco? Access our full analysis report here, it’s free.
- Automobile Manufacturing company Rivian (NASDAQ: RIVN) jumped 4.1%. Is now the time to buy Rivian? Access our full analysis report here, it’s free.
- Automobile Manufacturing company Visteon (NASDAQ: VC) jumped 2.7%. Is now the time to buy Visteon? Access our full analysis report here, it’s free.
Zooming In On Reddit (RDDT)
Reddit’s shares are extremely volatile and have had 52 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 11% on the news that investors revisited the company's strong second-quarter earnings results, prompting a rebound from a recent sell-off. The stock had previously fallen more than 20% after the earnings release, despite the company beating estimates. That drop was fueled by investor fears over "choppy" search referral traffic from Google and the absence of new AI data licensing deals. However, the underlying results were strong, with second-quarter revenue climbing 61% year-over-year to approximately $805 million. Furthermore, the company issued an upbeat third-quarter revenue forecast of $860 million to $870 million, which surpassed Wall Street's expectations of around $830 million, encouraging investors to look past the initial concerns.
Reddit is down 34% since the beginning of the year, and at $159.75 per share, it is trading 41% below its 52-week high of $270.71 from September 2025. Investors who bought $1,000 worth of Reddit’s shares at the IPO in March 2024 would now be looking at an investment worth $3,167.
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