What Happened?
A number of stocks jumped in the afternoon session after weaker-than-expected U.S. employment data cooled Treasury yields, easing interest rate pressure.
The Bureau of Labor Statistics reported that nonfarm payrolls increased by 29,000 in September, falling short of the 84,000 projected by economists polled by Dow Jones, while the unemployment rate rose to 4.2%. For the broader group, softer hiring eases interest-rate pressure on high-multiple growth equities by pulling borrowing costs lower.
However, further deceleration in the labor market risks dampening cyclical end-market demand across industrial and automotive chip channels. Semiconductor valuations expand when falling yields reduce the discount rate on long-duration earnings, provided enterprise infrastructure spending does not deteriorate.
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 Analog Devices (NASDAQ: ADI) jumped 3.6%. Is now the time to buy Analog Devices? Access our full analysis report here, it’s free.
- Processors and Graphics Chips company AMD (NASDAQ: AMD) jumped 3%. Is now the time to buy AMD? Access our full analysis report here, it’s free.
- Semiconductor Manufacturing company KLA Corporation (NASDAQ: KLAC) jumped 3.7%. Is now the time to buy KLA Corporation? Access our full analysis report here, it’s free.
- Semiconductor Manufacturing company Lam Research (NASDAQ: LRCX) jumped 3.1%. Is now the time to buy Lam Research? Access our full analysis report here, it’s free.
- Semiconductor Manufacturing company Marvell Technology (NASDAQ: MRVL) jumped 2.7%. Is now the time to buy Marvell Technology? Access our full analysis report here, it’s free.
Zooming In On KLA Corporation (KLAC)
KLA Corporation’s shares are extremely volatile and have had 40 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 28 days ago when the stock gained 7.2% on the news that investors shrugged off interest rate hike expectations following the August jobs report and unwound defensive positioning in beaten-down chip designers, according to Bloomberg.
The U.S. Bureau of Labor Statistics reported that employers added 162,000 nonfarm payroll jobs in August, easily beating estimates of a 56,000 increase from economists polled by FactSet. The agency also reported that the national unemployment rate held steady at 4.1%. The strong labor data initially raised expectations for further monetary tightening, but odds of a September quarter-point interest rate hike settled at a coin-toss 50%, according to federal funds futures data reported by Bloomberg.
Typically, higher interest rates place downward pressure on high-growth technology equities by discounting future projected cash flows.Despite these macroeconomic concerns, traders rotated back into the chip sector. During the regular session, KLA Corporation rose 7.98% and Semtech climbed 7.96%, while Marvell Technology advanced 5.92% and Advanced Micro Devices gained 4.18%, according to stock market quote data.
KLA Corporation is up 62.6% since the beginning of the year, but at $207.19 per share, it is still trading 31.3% below its 52-week high of $301.71 from June 2026. Investors who bought $1,000 worth of KLA Corporation’s shares 5 years ago would now be looking at an investment worth $6,296.
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