What Happened?

Shares of work management software maker Asana (NYSE: ASAN) fell 5.1% in the morning session after the major indices declined sharply (Nasdaq down 1.9%, S&P 500 down 1.1%) as investors appeared to be locking in some gains in a year marked by significant progress in the Fed's effort to deliver a soft landing—taming inflation without causing more damage to the economy—despite early signs of weakness in the labor market. 

With two more trading days to wrap up the year, investors are likely hoping for a "Santa Claus Rally." So far, the Nasdaq has climbed more than 30% year to date, while the S&P 500 has gained over 25%, reflecting the resilience of the U.S. economy. 

The improved momentum, especially in the second half of the year, was fueled by the ongoing investment in AI within the tech sector, the Fed's continued dovish shift as inflation cooled, enabling the Powell-led committee to deliver three rate cuts (0.5% in September and 0.25% each in November and December). 

Additionally, the November 2024 elections sparked optimism for more business-friendly regulations in energy, tech, and industrials following Donald Trump's return to the presidency. 

Nonetheless, the outlook for 2025 remains clouded by the pace and magnitude of future rate cuts as well as potential changes in trade policy and corporate taxes once the Trump administration takes over. The path forward is marked by uncertainty.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Asana? Access our full analysis report here, it’s free.

What The Market Is Telling Us

Asana’s shares are very volatile and have had 28 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 11 days ago when the stock gained 12.6% as stocks soared, led by the Nasdaq, which climbed 1.2%, while the S&P 500 also increased by 0.5% amid continued positive momentum. Investors were bracing for the outcome of the Fed's policy meeting later in the week, with overall sentiment indicating that markets anticipate no major surprises. The consensus was for the Fed to cut rates by 0.25% during its final committee meeting of the year. Recent economic data, including the November 2024 CPI report, continue to support the soft landing narrative—indicating that the Fed can control inflation without harming the economy.

Asana is up 21.8% since the beginning of the year, but at $21.62 per share, it is still trading 21.5% below its 52-week high of $27.52 from December 2024. Investors who bought $1,000 worth of Asana’s shares at the IPO in September 2020 would now be looking at an investment worth $750.52.

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