What Happened?
A number of stocks fell in the afternoon session after the combination of rising oil prices, higher Treasury yields, and shifting rate expectations tightened the macro backdrop for corporate clients.
ADP's May payroll print (122,000 jobs added, above the 110,000 consensus) confirmed the labor market remains firm, but the data also pushed rate hike expectations higher, reducing the likelihood of the relief companies had been anticipating.
Adding to the weakness, GitLab announced it would cut approximately 14% of its workforce and exit 22 countries, signaling that enterprise clients continue to manage costs tightly even amid a broader market recovery. In a sector where spending depends on corporate confidence, higher-for-longer rates and geopolitical uncertainty are a direct headwind.
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:
- IT Services & Consulting company DXC (NYSE: DXC) fell 7.2%. Is now the time to buy DXC? Access our full analysis report here, it’s free.
- Data & Business Process Services company Fair Isaac Corporation (NYSE: FICO) fell 7%. Is now the time to buy Fair Isaac Corporation? Access our full analysis report here, it’s free.
Zooming In On DXC (DXC)
DXC’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 12 days ago when the stock gained 2.9% on the news that sentiment improved as the broader market rallied on Iran peace deal progress and cooling Treasury yields.
IT services firms (Accenture, Cognizant, Infosys, EPAM, IBM Consulting) sell project-based digital transformation work: the kind of multi-year engagements that get green-lit only when corporate customers feel confident about the macro environment. Generative AI added a new structural layer to the trade.
Every Fortune 500 CIO is racing to implement AI agents and rewrite the automation playbook, and these firms are the ones getting paid to do the implementation. The macro tailwind compounds the AI tailwind: lower yields raise the present value of multi-year contracts, while AI adoption increases the size and urgency of those contracts. That dual mechanism was what the day’s tape priced in.
DXC is down 34.6% since the beginning of the year, and at $9.22 per share, it is trading 43.3% below its 52-week high of $16.24 from July 2025. Investors who bought $1,000 worth of DXC’s shares 5 years ago would now be looking at only $228.32.
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