What Happened?
A number of stocks fell in the morning session after investors took some profits off the table as markets awaited signals on future monetary policy from the Federal Reserve's Jackson Hole symposium later in the week.
The downturn in the market was largely attributed to a significant sell-off in megacap tech and chipmaker shares. Nvidia, Advanced Micro Devices (AMD), and Broadcom all saw notable drops, dragging down the VanEck Semiconductor ETF. Other major tech-related companies like Tesla, Meta Platforms, and Netflix were also under pressure. A key reason for this trend is that much of the recent market gains have been concentrated in the "AI trade," which includes these large technology and semiconductor companies. So this could also mean that some investors are locking in some gains ahead of more definitive feedback from the Fed.
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 CoreCivic (NYSE: CXW) fell 3.1%. Is now the time to buy CoreCivic? Access our full analysis report here, it’s free.
- Digital Media & Content Platforms company WEBTOON (NASDAQ: WBTN) fell 6.8%. Is now the time to buy WEBTOON? Access our full analysis report here, it’s free.
- Advertising & Marketing Services company Magnite (NASDAQ: MGNI) fell 8.1%. Is now the time to buy Magnite? Access our full analysis report here, it’s free.
- Industrial & Environmental Services company CECO Environmental (NASDAQ: CECO) fell 3.6%. Is now the time to buy CECO Environmental? Access our full analysis report here, it’s free.
- Hardware & Infrastructure company Super Micro (NASDAQ: SMCI) fell 4.9%. Is now the time to buy Super Micro? Access our full analysis report here, it’s free.
Zooming In On Magnite (MGNI)
Magnite’s shares are extremely volatile and have had 31 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 18 days ago when the stock dropped 3% on the news that 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.
Magnite is up 37.4% since the beginning of the year, but at $22.12 per share, it is still trading 10.4% below its 52-week high of $24.67 from July 2025. Investors who bought $1,000 worth of Magnite’s shares 5 years ago would now be looking at an investment worth $2,933.
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