What Happened?
A number of stocks fell in the afternoon session after a dismal August jobs report stoked fears of a significant economic slowdown.
The U.S. economy added a mere 22,000 jobs, falling dramatically short of the 75,000 analysts had anticipated. This figure, combined with downward revisions for the previous two months and an unemployment rate that climbed to 4.3%, painted a stark picture of a cooling labor market. The report has intensified debates on Wall Street about whether the slowdown is enough to prompt a supportive interest rate cut from the Federal Reserve, or if it's a precursor to a more serious recession. Some economists expressed significant concern, with one noting the labor market appears to have "headed off a cliff edge." The data suggests that businesses are pausing hiring amidst economic uncertainty, increasing worries about broader economic trouble ahead.
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:
- Terrestrial Telecommunication Services company Lumen (NYSE: LUMN) fell 4.6%. Is now the time to buy Lumen? Access our full analysis report here, it’s free.
- Industrial & Environmental Services company CECO Environmental (NASDAQ: CECO) fell 3.7%. Is now the time to buy CECO Environmental? Access our full analysis report here, it’s free.
- Enterprise Networking company Applied Digital (NASDAQ: APLD) fell 2.5%. Is now the time to buy Applied Digital? Access our full analysis report here, it’s free.
- Professional Staffing & HR Solutions company Insperity (NYSE: NSP) fell 3.9%. Is now the time to buy Insperity? Access our full analysis report here, it’s free.
Zooming In On Lumen (LUMN)
Lumen’s shares are extremely volatile and have had 48 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 1 day ago when the stock gained 9.4% on the news that the company announced a collaboration with Palantir Technologies to integrate Palantir's artificial intelligence platforms into its business. Lumen, which is transforming from a traditional telecom provider into a technology infrastructure company, will use Palantir's Foundry and Artificial Intelligence Platform (AIP) across its operations, finance, and technology functions. The partnership aims to streamline workflows, accelerate decision-making, and simplify complex legacy operations as Lumen modernizes its business to meet customer demand for multi-cloud, AI-ready services. In separate news, the company also announced plans for a debt offering of $425 million in new notes, intending to use the proceeds to redeem $373 million of existing, higher-interest notes.
Lumen is down 15.4% since the beginning of the year, and at $4.73 per share, it is trading 53.2% below its 52-week high of $10.12 from November 2024. Investors who bought $1,000 worth of Lumen’s shares 5 years ago would now be looking at an investment worth $445.54.
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