We’ve seen a number of hiring freezes and layoff announcements in recent weeks. Indeed, Big Tech hasn’t been exempt from this. In fact, many suggest large tech firms may lead the way in tightening their belts as we head into a possible recession. However, today’s report that Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) is going to pause hiring for two weeks has provided some downward pressure on GOOG stock, which is holding onto some small gains as we approach today’s close.
With so much macroeconomic uncertainty, taking a cautious approach to hiring makes sense. Companies that beef themselves up too much may have to lay the hammer down harder than they’d otherwise want on their existing employees. And with a labor market that’s already so tight, hiring has become much less attractive anyhow, making these decisions even easier.
That said, this announcement today could be bigger than others we’ve seen of late. Let’s dive into why the market has reacted so negatively to this news this afternoon.
GOOG Stock Gives Up Gains on Hiring Announcement
As one of the biggest employers in the U.S. tech industry, this announcement is big news for job seekers and investors alike. A hiring pause for a company with a continuous requirement for talent is a big deal. From a purely operational perspective, such a move isn’t often made unless there’s some serious uncertainty about a company’s forward outlook.
Such appears to be the case with many boards and management teams right now, who are trying to forecast what the economy will look like a year or two from now. A headcount review from any company suggest this is the case. And as the tech leader it is, Alphabet is often seen as a gauge of sentiment across the broader sector.
For investors digesting what this may mean for GOOG stock, more caution may be expected. Such a hiring move generally precedes cautious forecasts and worse-than-expected earnings results. Accordingly, with Alphabet’s earnings release scheduled for next week, the timing of this move will likely raise eyebrows.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.