What Happened?
A number of stocks fell in the afternoon 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:
- Professional Staffing & HR Solutions company Kforce (NYSE: KFRC) fell 3.4%. Is now the time to buy Kforce? Access our full analysis report here, it’s free.
- Hardware & Infrastructure company NetApp (NASDAQ: NTAP) fell 3%. Is now the time to buy NetApp? Access our full analysis report here, it’s free.
- Specialized Technology company PAR Technology (NYSE: PAR) fell 3.3%. Is now the time to buy PAR Technology? Access our full analysis report here, it’s free.
- IT Distribution & Solutions company TD SYNNEX (NYSE: SNX) fell 3.3%. Is now the time to buy TD SYNNEX? Access our full analysis report here, it’s free.
- Professional Staffing & HR Solutions company Robert Half (NYSE: RHI) fell 3.7%. Is now the time to buy Robert Half? Access our full analysis report here, it’s free.
Zooming In On Robert Half (RHI)
Robert Half’s shares are not very volatile and have only had 9 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was 8 days ago when the stock dropped 7.3% on the news that the company reported second-quarter results that beat estimates but provided a weaker-than-expected outlook for the third quarter.
The staffing and consulting firm projected third-quarter earnings per share between $0.37 and $0.47. The midpoint of this guidance fell approximately 26% below Wall Street expectations of $0.58, signaling that the tough hiring environment was expected to persist. While the company's second-quarter earnings of $0.41 per share and revenue of $1.37 billion slightly beat analyst estimates, this was overshadowed by the bleak outlook. The second-quarter revenue represented a 7% decline year-over-year, with the company's core Talent Solutions segment being the primary source of weakness. The disappointing forecast suggested to investors that no near-term turnaround was anticipated.
Robert Half is down 48.1% since the beginning of the year, and at $35.55 per share, it is trading 53.7% below its 52-week high of $76.80 from November 2024. Investors who bought $1,000 worth of Robert Half’s shares 5 years ago would now be looking at an investment worth $696.96.
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