What happened
Shares of the video streaming platform company Roku (ROKU -3.05%) were sliding today, reversing their gains from yesterday.
Investors appear to be reacting to some jobs data that indicated that the labor market is still resilient. A strong labor market could encourage the Federal Reserve to keep raising interest rates. As a result, Roku's shares were down by 6.8% as of 11:30 a.m. ET.
So what
Yesterday, the broader market jumped as investors hoped that stocks had reached their bottom after the S&P 500 fell more than 9% in September. That helped boost Roku's share price as well, which gained 4.4% yesterday.
Image source: Getty Images.
But today the company's stock stumbled as investors processed the latest jobs data from Automatic Data Processing that showed that businesses added 208,000 jobs in September, which was higher than analysts were estimating.
While a strong labor market is great for job seekers, investors are concerned that it will encourage the Federal Reserve to continue its aggressive interest rate hikes.
This has Roku investors worried that increasing rates will continue to drag down the economy and hurt the company's ability to grow its top and bottom lines. Roku's stock is already down 80% over the past 12 months and investors are concerned that further economic pressure brought on by the Fed could send the stock lower.
Now what
Investors will get a better look at the state of the labor market later this week when the Bureau of Labor Statistics releases its latest data. But long-term investors should be cautious about buying and selling stocks based on short-term news and instead focus on a company's underlying business. Roku shareholders will get a clearer picture of how the company is doing financially when it reports its third-quarter results on Nov. 2.
