What Happened?
A number of stocks jumped in the afternoon session after the Software as a Service (SaaS) sector rebounded following the sell-off in the previous trading session as a weaker-than-expected U.S. jobs report increased the probability of a Federal Reserve interest rate cut. The July Nonfarm Payrolls (NFP) report showed the U.S. economy added only 73,000 jobs, significantly below the 110,000 forecast. This, combined with downward revisions for May and June, signaled a cooling labor market to investors. In response, market expectations for a September interest rate cut by the Federal Reserve surged from roughly 40% to over 80%. A potential rate cut is generally favorable for growth sectors like technology and SaaS, as lower rates can increase the present value of their future earnings, boosting stock valuations.
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:
- Design Software company Unity (NYSE:U) jumped 7.2%. Is now the time to buy Unity? Access our full analysis report here, it’s free.
- Data Analytics company Domo (NASDAQ:DOMO) jumped 4.9%. Is now the time to buy Domo? Access our full analysis report here, it’s free.
- Video Conferencing company Five9 (NASDAQ:FIVN) jumped 4%. Is now the time to buy Five9? Access our full analysis report here, it’s free.
- Data Analytics company Health Catalyst (NASDAQ:HCAT) jumped 3.1%. Is now the time to buy Health Catalyst? Access our full analysis report here, it’s free.
- E-commerce Software company Shopify (NASDAQ:SHOP) jumped 5.5%. Is now the time to buy Shopify? Access our full analysis report here, it’s free.
Zooming In On Unity (U)
Unity’s shares are extremely volatile and have had 52 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 4 days ago when the stock gained 3% on the news that a string of impressive earnings reports from industry leaders pointed to resilient growth. Leading the charge was Microsoft, which neared a $4 trillion valuation after reporting booming sales in its Azure cloud division and forecasting record spending. This positive momentum was echoed elsewhere in the sector. PTC Inc. shares jumped on a 24% revenue increase driven by its AI-powered portfolio and raised its full-year outlook. Similarly, F5 Networks and BigCommerce both surpassed analyst expectations for revenue and earnings. The optimism extended to ad-tech, where AppLovin gained on investor confidence in its AI-driven advertising solutions, showcasing broad strength in specific software niches.
Unity is up 37.8% since the beginning of the year, and at $33.80 per share, it is trading close to its 52-week high of $36.75 from July 2025. Investors who bought $1,000 worth of Unity’s shares at the IPO in September 2020 would now be looking at an investment worth $494.31.
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