What Happened?

Shares of game engine maker Unity (NYSE: U) jumped 5.7% in the afternoon session after stocks rebounded (Nasdaq +2.0%, S&P 500 +1.5%) following a report from The Wall Street Journal stating that the Trump administration's reciprocal tariffs, to be announced on April 2, 2025, would be more narrowly targeted. The market reaction indicated that investors took that as a sign the economic impact of the tariffs, particularly on inflation and growth, might not be as bad as they initially feared. 

That's a bit of a relief, which likely gave businesses and analysts some space to rethink their outlooks. Earlier, the administration had hinted at much broader tariffs that could have hit any country placing duties on U.S. imports, so this shift was likely a welcome surprise for the market.

The shares closed the day at $22.73, up 5.6% from previous close.

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What The Market Is Telling Us

Unity’s shares are extremely volatile and have had 38 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 10.3% after the Nasdaq dropped 1.3%, marking its fourth consecutive day of losses, as investor concerns over the tech sector continue to mount. 

The downturn appeared to be most pronounced in stocks heavily exposed to the AI market, with traders growing uneasy about stretched valuations and potential slowdowns in AI-related spending. 

Adding to the pressure, a lack of positive economic data has fueled broader uncertainty about the U.S. economy, particularly regarding consumer confidence and corporate investment trends.  

Separately, the trade debates returned after President Trump announced that the tariffs on Canada and Mexico would "go forward" when the temporary suspension expired. This sparked fresh worries about supply chain issues and rising costs for companies that depend on cross-border trade, leading analysts to rethink the economic impact on affected industries. 

Unity is down 7.7% since the beginning of the year, and at $22.62 per share, it is trading 20.2% below its 52-week high of $28.34 from February 2025. Investors who bought $1,000 worth of Unity’s shares at the IPO in September 2020 would now be looking at an investment worth $330.97.

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