Tech Stocks Rally on Weak Jobs Report
Major tech stocks rallied Friday amid a weak jobs report that revealed an unexpected drop in payrolls for July, with SpaceX, Palantir, and Cloudflare shares all rising at least 8% in the early hours of trading.
SpaceX shares are down 16% since debuting in June. Photo by Justin Sullivan/Getty Images
Key Facts
- SpaceX shares jumped 12% shortly before 11:45 a.m. EDT, rallying from an all-time low recorded Wednesday.
- Palantir rose 8.9% to around $169 per share and capped off a strong week of gains, with the stock rising 35% in the last five days of trading.
- Cloudflare’s stock surged 8% to around the $307 mark, rising a day after the company soared beyond revenue expectations ($696.1 million).
- Friday’s jobs report revealed nonfarm payrolls fell 23,000, well below Dow Jones expectations of a gain of 83,000.
- The labor force participation rate, which is the percentage of working-age Americans who are either working or actively looking for work, ticked down to 61.4%—its lowest mark in over five years.
What Other Tech Stocks Were Boosted Friday?
Microchip Technology, an American semiconductor company, surged 12.9% to a two-week high. Reddit shares joined in on Friday’s rally, rising 8.1% before noon, though the forum platform’s stock remains down 30% since January. Uber spiked 6% to just under $75 per share. The ride-hailing company is down 9.3% year-to-date.
What Else Did The Jobs Report Show?
The unemployment rate fell to 4.1% from 4.2% in June. Average hourly earnings edged up two cents, dropping the 12-month average to 3.2%—a five year low. Government education and retail jobs spearheaded the drop in jobs, with the former sector declining by 50,000. Healthcare jobs increased by 22,000, well below its 12-month average of 36,000.
Key Background
Tech stocks have outpaced the 13.3% gains made by the S&P 500 this year, with the sector rising nearly 24% since January. That surge has been led by juggernauts like Micron (+205% YTD), Intel (+175% YTD), Nvidia (+20% YTD) and Apple (+14.8% YTD). However, the rally has not extended to major companies including Tesla and Meta, which are down 26% and 9%, respectively, since the start of the year. Several tech stocks have been boosted by the artificial intelligence boom, which has allowed companies to cash in on infrastructure and cloud computing demand.
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