What Happened?
A number of stocks fell in the afternoon session after a surprisingly weak August jobs report fueled concerns of a cooling economy but also raised expectations for Federal Reserve interest rate cuts.
The U.S. economy added a mere 22,000 jobs last month, a significant miss from the 75,000 analysts had projected, according to the Bureau of Labor Statistics. This figure represents a notable slowdown in the labor market. While such a sharp decline in job growth can be a bearish signal for the economy, investors are now betting it will force the Federal Reserve's hand. As noted by one economist, the market's initial reaction seems to be more focused on the increased likelihood of Fed rate cuts rather than the immediate concerns about economic cooling, with a September cut now seen as fully priced in.
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:
- Broadcasting company iHeartMedia (NASDAQ: IHRT) fell 7.5%. Is now the time to buy iHeartMedia? Access our full analysis report here, it’s free.
- Wireless, Cable and Satellite company Altice (NYSE: ATUS) fell 4.5%. Is now the time to buy Altice? Access our full analysis report here, it’s free.
- Casino Operator company Bally's (NYSE: BALY) fell 3.2%. Is now the time to buy Bally's? Access our full analysis report here, it’s free.
- Leisure Facilities company Lucky Strike (NYSE: LUCK) fell 4%. Is now the time to buy Lucky Strike? Access our full analysis report here, it’s free.
- Leisure Facilities company European Wax Center (NASDAQ: EWCZ) fell 2.6%. Is now the time to buy European Wax Center? Access our full analysis report here, it’s free.
Zooming In On iHeartMedia (IHRT)
iHeartMedia’s shares are extremely volatile and have had 72 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 3 days ago when the stock gained 2.8% on the news that the company extended the employment agreements for its top executives.
The media company announced that CEO Bob Pittman and President/COO/CFO Rich Bressler have inked new deals to remain in their roles through December 31, 2029. This move signals long-term leadership stability for the nation's largest owner of radio stations.
By securing its top management for an extended period, the company provides investors with clarity and continuity regarding its strategic direction. The amended agreements also include provisions allowing for outstanding equity awards to vest even after a qualifying retirement, demonstrating the board's confidence in the executive team. The news was detailed in an 8-K filing with the SEC.
iHeartMedia is up 4.2% since the beginning of the year, but at $2.11 per share, it is still trading 19.3% below its 52-week high of $2.61 from December 2024. Investors who bought $1,000 worth of iHeartMedia’s shares 5 years ago would now be looking at an investment worth $230.56.
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