What Happened?

A number of stocks fell in the afternoon session after investors took a breather following a record-setting rally, with concerns over the Federal Reserve's next move and a prolonged government shutdown weighing on sentiment. 

The pullback came as the U.S. government shutdown extended into its second week, creating uncertainty in the market. Investors were also closely watching for signals from the Federal Reserve regarding its monetary policy. This combination of factors led to a cautious mood on Wall Street, causing traders to pause and reassess their positions after weeks of significant gains. Adding to the unease, Chief Economist at Moody's Analytics, Mark Zandi, warned that 22 states are already showing clear signs of a recession, placing the broader U.S. economy in a precarious position.

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:

• Gig Economy company Angi (NASDAQ: ANGI) fell 8%. Is now the time to buy Angi? Access our full analysis report here, it’s free for active Edge members.
• Social Networking company Yelp (NYSE: YELP) fell 4.2%. Is now the time to buy Yelp? Access our full analysis report here, it’s free for active Edge members.
• Consumer Subscription company Udemy (NASDAQ: UDMY) fell 7.1%. Is now the time to buy Udemy? Access our full analysis report here, it’s free for active Edge members.
• Online Marketplace company Shutterstock (NYSE: SSTK) fell 4.9%. Is now the time to buy Shutterstock? Access our full analysis report here, it’s free for active Edge members.
• Gig Economy company Lyft (NASDAQ: LYFT) fell 3%. Is now the time to buy Lyft? Access our full analysis report here, it’s free for active Edge members.

Zooming In On Angi (ANGI)

Angi’s shares are very volatile and have had 25 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 27 days ago when the stock dropped 4.4% on the news that a key competitor in the home services marketplace, Urban Company, launched its Initial Public Offering (IPO). 

Urban Company, which connects customers with a wide range of service providers, began its IPO on Wednesday, September 10. The emergence of a new publicly traded competitor in the same space can create pressure on existing players like Angi. Investors may be concerned about increased competition for both market share and investment capital, as Urban Company is being described as potentially the only listed company of its specific type. This new entry into the public markets appears to be prompting a re-evaluation of Angi's competitive position.

Angi is down 10.2% since the beginning of the year, and at $14.55 per share, it is trading 44.5% below its 52-week high of $26.20 from November 2024. Investors who bought $1,000 worth of Angi’s shares 5 years ago would now be looking at an investment worth $114.20.

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