Why Applied Digital Stock Is Sinking Today

Key Points

• Applied Digital stock rocketed higher yesterday, but macroeconomic concerns are pushing its share price lower today.

• The July jobs report showed fewer-than-expected additions, and jobs estimates for May and June saw big downward revisions.

• The stock market as a whole is also under pressure due to new tariffs introduced by President Trump yesterday.

• 10 stocks we like better than Applied Digital ›

Applied Digital (NASDAQ: APLD) stock is losing ground Friday after posting huge gains in yesterday's session. The company's share price was down 3.7% as of 2:10 p.m. ET. At the same point in the day, the S&P 500 (SNPINDEX: ^GSPC) was down 1.8%, and the Nasdaq Composite (NASDAQINDEX: ^IXIC) was down 2.5%.

Applied Digital stock had been down as much as 13.2% shortly after the market opened, but its valuation has regained significant ground in subsequent trading. The strength of the company's recent earnings report has likely helped reduce its valuation slide on the day, but the stock is still seeing a significant pullback in response to the latest U.S. jobs report and other macroeconomic concerns.

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Applied Digital stock is slipping in response to jobs numbers and tariffs

The Bureau of Labor Statistics (BLS) published its July jobs report this morning and amended previously reported figures for June and May. The BLS report showed that only 73,000 nonfarm jobs were added to the U.S. economy last month -- well below the 100,000 job additions called for by the average economist estimate. Making matters worse, June's estimated jobs growth was revised from 147,000 to 14,000, and May's jobs growth was lowered from 144,000 to 19,000.

Adding another bearish pressure to the broader market, President Trump signed an executive order yesterday evening that introduced new tariffs on a wide range of countries. The tariffs are set to go into effect on Aug. 7, which means there is very little time for countries to negotiate trade deals that could mitigate the new import taxes.

What's next for Applied Digital?

Macroeconomic developments will continue to play a key role in shaping performance for Applied Digital and the broader market. Stocks have been on an impressive rally over the last few months, and major indexes have recently set new highs, but some recent economic data has raised concerns about how much momentum is left in the recent bull run. Concerns about the overall health of the economy and the possibility that the Federal Reserve may have waited too long to lower interest rates could continue to weigh on valuations.

On the other hand, Applied Digital is coming off of some big wins. The company's recent announcement that artificial intelligence (AI) specialist CoreWeave has exercised an option for an additional 150 megawatts of data-center processing is a clear bullish development and points to a promising long-term outlook.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.