What Happened?
A number of stocks fell in the afternoon session after the broader U.S. stock market declined amid investor caution and a pullback in technology stocks.
The main story? Investors are cashing in on a good run and feeling a bit cautious. After a fantastic run, many of those high-flying AI and technology stocks saw investors take profits: selling shares to lock in their gains. This is often called a "market rotation." Money is moving out of the red-hot tech sector (which some worry has become too expensive) and into other parts of the market that investors may currently deem more stable or reasonably-priced.
There's a secondary reason for the cautious mood: The long government shutdown came to an end. Though it's typically interpreted as good news, it also means a flood of delayed economic reports will be released. For weeks, investors were "flying blind" without key updates on the economy's health, like inflation data and the jobs report. In typical "sell the news" fashion, investors may also be taking profits and selling in anticipation that the new data would potentially give the Federal Reserve reasons to slow or even pause future rate cuts.
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:
- Online Marketplace company Teladoc (NYSE:TDOC) fell 5.3%. Is now the time to buy Teladoc? Access our full analysis report here, it’s free for active Edge members.
- Online Marketplace company MercadoLibre (NASDAQ:MELI) fell 3.2%. Is now the time to buy MercadoLibre? Access our full analysis report here, it’s free for active Edge members.
- Social Networking company Reddit (NYSE:RDDT) fell 6.3%. Is now the time to buy Reddit? Access our full analysis report here, it’s free for active Edge members.
- Gig Economy company Lyft (NASDAQ:LYFT) fell 3.8%. Is now the time to buy Lyft? Access our full analysis report here, it’s free for active Edge members.
- Online Retail company Wayfair (NYSE:W) fell 4%. Is now the time to buy Wayfair? Access our full analysis report here, it’s free for active Edge members.
Zooming In On Reddit (RDDT)
Reddit’s shares are extremely volatile and have had 66 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 6.1% on the news that the company launched new interactive ad options, building on the positive momentum from its recent strong third-quarter earnings report.
Reddit introduced “Interactive Ads,” a unique format that allows brands to create custom, engaging experiences like quizzes and countdowns directly within the platform's communities. This move aimed to attract more advertisers. The positive sentiment was also supported by the company's impressive third-quarter results from the previous week, which showed a 68% year-over-year revenue growth. A broader rally in the technology sector, with the Nasdaq composite gaining, also provided a favorable backdrop for the stock's move.
Reddit is up 14.4% since the beginning of the year, but at $189.81 per share, it is still trading 29.9% below its 52-week high of $270.71 from September 2025. Investors who bought $1,000 worth of Reddit’s shares at the IPO in March 2024 would now be looking at an investment worth $3,764.
While Wall Street chases Nvidia at all-time highs, an under-the-radar semiconductor supplier is dominating a critical AI component these giants can’t build without. Click here to access our full research report.