What Happened?
A number of stocks jumped in the morning session after the Software as a Service (SaaS) sector rebounded following the sell-off in the previous trading session as a weaker-than-expected U.S. jobs report increased the probability of a Federal Reserve interest rate cut. The July Nonfarm Payrolls (NFP) report showed the U.S. economy added only 73,000 jobs, significantly below the 110,000 forecast. This, combined with downward revisions for May and June, signaled a cooling labor market to investors. In response, market expectations for a September interest rate cut by the Federal Reserve surged from roughly 40% to over 80%. A potential rate cut is generally favorable for growth sectors like technology and SaaS, as lower rates can increase the present value of their future earnings, boosting stock valuations.
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:
- Finance and Accounting Software company Bill.com (NYSE: BILL) jumped 5%. Is now the time to buy Bill.com? Access our full analysis report here, it’s free.
- Cloud Monitoring company PagerDuty (NYSE: PD) jumped 3%. Is now the time to buy PagerDuty? Access our full analysis report here, it’s free.
- Listing Management Software company Semrush (NYSE: SEMR) jumped 8.5%. Is now the time to buy Semrush? Access our full analysis report here, it’s free.
- Advertising Software company PubMatic (NASDAQ: PUBM) jumped 4.5%. Is now the time to buy PubMatic? Access our full analysis report here, it’s free.
- Data Analytics company MicroStrategy (NASDAQ: MSTR) jumped 5.3%. Is now the time to buy MicroStrategy? Access our full analysis report here, it’s free.
Zooming In On Semrush (SEMR)
Semrush’s shares are very volatile and have had 21 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 3 days ago when the stock dropped 4.3% on the news that the White House announced a new round of steep global tariffs, sparking concerns of a trade war and its impact on the U.S. and global economies. This move creates significant uncertainty for businesses and investors. The new tariffs, with rates of up to 41% on imports from 68 countries and the European Union, prompted a broad market sell-off, with the tech-heavy Nasdaq index showing notable weakness.
Adding to the bearish sentiment was a weaker-than-expected July jobs report, which revealed that employers created only 73,000 jobs, far below economists' expectations. This combination of trade fears and signs of a slowing labor market has created a "risk-off" environment, leading investors to pull back from growth-oriented sectors like software and technology.
Semrush is down 21.5% since the beginning of the year, and at $9.21 per share, it is trading 49.9% below its 52-week high of $18.37 from February 2025. Investors who bought $1,000 worth of Semrush’s shares at the IPO in March 2021 would now be looking at an investment worth $820.54.
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