What Happened?
A number of stocks fell in the morning session after 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.
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:
- Content Delivery company F5 (NASDAQ: FFIV) fell 3.8%. Is now the time to buy F5? Access our full analysis report here, it’s free.
- Data Storage company DigitalOcean (NYSE: DOCN) fell 6.2%. Is now the time to buy DigitalOcean? Access our full analysis report here, it’s free.
- Listing Management Software company Semrush (NYSE: SEMR) fell 4.3%. Is now the time to buy Semrush? Access our full analysis report here, it’s free.
- Data Analytics company Amplitude (NASDAQ: AMPL) fell 4%. Is now the time to buy Amplitude? Access our full analysis report here, it’s free.
- Payments Software company Marqeta (NASDAQ: MQ) fell 3.5%. Is now the time to buy Marqeta? Access our full analysis report here, it’s free.
Zooming In On DigitalOcean (DOCN)
DigitalOcean’s shares are extremely volatile and have had 33 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 21 days ago when the stock dropped 4% on the news that the Trump administration announced intentions to impose a 35% tariff on many goods imported from Canada. This move is far more than a typical trade dispute; it targets the United States' largest and most deeply integrated trading partner. Canada is not merely a neighbor but a critical component of North American supply chains, particularly in sectors like automotive, energy, and critical minerals. This move has sparked concerns about potential retaliatory actions and a wider impact on the North American economy, leading to a risk-off sentiment among investors. The S&P 500, Dow Jones Industrial Average, and Nasdaq all opened lower, pulling back from recent record highs and heading for their first weekly loss in three weeks.
DigitalOcean is down 24.7% since the beginning of the year, and at $25.80 per share, it is trading 44.7% below its 52-week high of $46.69 from February 2025. Investors who bought $1,000 worth of DigitalOcean’s shares at the IPO in March 2021 would now be looking at an investment worth $607.06.
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