What Happened?

A number of stocks fell in the morning session after the U.S. jobs report for July came in significantly weaker than expected while new widespread import tariffs were announced, sparking fears of a potential economic slowdown. 

The U.S. economy added only 73,000 jobs, far below estimates, and massive downward revisions to the prior two months painted a much weaker picture of the labor market. This has stoked recession fears, which would directly impact demand for chips used in countless products. Compounding these worries, the White House announced new tariffs, including a 20% levy on imports from Taiwan, a global hub for chip manufacturing. This dual shock of slowing domestic growth and renewed trade friction creates a challenging outlook for the highly cyclical and globally connected semiconductor industry, leading to a broad-based sell-off.

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:

• Analog Semiconductors company Microchip Technology (NASDAQ: MCHP) fell 3.1%. Is now the time to buy Microchip Technology? Access our full analysis report here, it’s free.
• Analog Semiconductors company MACOM (NASDAQ: MTSI) fell 3.9%. Is now the time to buy MACOM? Access our full analysis report here, it’s free.
• Analog Semiconductors company NXP Semiconductors (NASDAQ: NXPI) fell 3.3%. Is now the time to buy NXP Semiconductors? Access our full analysis report here, it’s free.
• Analog Semiconductors company Sensata Technologies (NYSE: ST) fell 4.1%. Is now the time to buy Sensata Technologies? Access our full analysis report here, it’s free.
• Analog Semiconductors company Skyworks Solutions (NASDAQ: SWKS) fell 3%. Is now the time to buy Skyworks Solutions? Access our full analysis report here, it’s free.

Zooming In On Sensata Technologies (ST)

Sensata Technologies’s shares are quite volatile and have had 16 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 2 days ago when the stock dropped 4.7% on the news that the company reported second-quarter results that showed a year-over-year revenue decline and provided a weak forecast for the third quarter, which overshadowed an earnings beat. The industrial technology firm's revenue for the quarter was $943.4 million, an 8.9% decrease compared to the same period in the prior year, while adjusted earnings per share also fell to $0.87. Although these results surpassed analyst estimates, investor focus shifted to the company's forward-looking statements. Sensata attributed the yearly revenue drop to prior divestitures and product management actions. More critically, its guidance for the third quarter pointed to a sequential slowdown, with management citing weakening demand in the heavy vehicle market as a key factor. This disappointing outlook appeared to outweigh the quarterly beat, prompting the sell-off.

Sensata Technologies is up 8.1% since the beginning of the year, but at $29.46 per share, it is still trading 23.6% below its 52-week high of $38.55 from August 2024. Investors who bought $1,000 worth of Sensata Technologies’s shares 5 years ago would now be looking at an investment worth $761.72.

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