What Happened?
A number of stocks fell in the afternoon session after a stronger-than-expected May jobs report fueled concerns that the Federal Reserve will keep interest rates elevated.
The U.S. economy added 172,000 nonfarm payroll jobs in May, significantly surpassing economists' expectations of around 85,000, while the unemployment rate held steady at 4.3%. This robust labor market data eases concerns of an economic slowdown but diminishes the likelihood of near-term interest rate cuts by the Federal Reserve. A prolonged high-interest-rate environment can create headwinds for growth-oriented sectors like technology, as it pressures stock valuations by making future earnings less valuable in the present. As a result, investors recalibrated their expectations for a 'higher-for-longer' rate scenario.
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:
- Enterprise Networking company Applied Digital (NASDAQ: APLD) fell 11.9%. Is now the time to buy Applied Digital? Access our full analysis report here, it’s free.
- Terrestrial Telecommunication Services company Lumen (NYSE: LUMN) fell 9.1%. Is now the time to buy Lumen? Access our full analysis report here, it’s free.
- Satellite Telecommunication Services company Iridium (NASDAQ: IRDM) fell 9.6%. Is now the time to buy Iridium? Access our full analysis report here, it’s free.
Zooming In On Applied Digital (APLD)
Applied Digital’s shares are extremely volatile and have had 93 moves greater than 5% over the last year. But moves this big are rare even for Applied Digital and indicate this news significantly impacted the market’s 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 combination of rising oil prices, higher Treasury yields, and shifting rate expectations tightened the macro backdrop for corporate clients.
ADP's May payroll print (122,000 jobs added, above the 110,000 consensus) confirmed the labor market remains firm, but the data also pushed rate hike expectations higher, reducing the likelihood of the relief companies had been anticipating. Adding to the weakness, GitLab announced it would cut approximately 14% of its workforce and exit 22 countries, signaling that enterprise clients continue to manage costs tightly even amid a broader market recovery. In a sector where spending depends on corporate confidence, higher-for-longer rates and geopolitical uncertainty are a direct headwind.
Applied Digital is up 37.3% since the beginning of the year, but at $38.59 per share, it is still trading 22.3% below its 52-week high of $49.65 from May 2026. Investors who bought $1,000 worth of Applied Digital’s shares 5 years ago would now be looking at an investment worth $6,631.
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