Layoff wave heats up during earnings season; investor reactions vary depending on reasons for adjustment

During this round of U.S. stock earnings season, as CEOs respond to changes brought about by the rise of artificial intelligence and seek to cut costs, many companies have disclosed layoff plans involving thousands of employees to investors. The market's reaction to layoff announcements appears to depend on how investors view the companies' actions: are they proactively adapting to a changing environment, or taking emergency measures in response to threats? After PayPal and Microsoft announced layoff plans, both companies' share prices saw a slight increase. In contrast, Volvo Cars stated it would further expand its layoffs due to a sharp decline in demand from the Asian market, and its share price fell sharply after the announcement. Chris Armstrong, equity strategist at Berenberg Bank, said, "The stock price reaction largely depends on whether the market believes the company is making adjustments from a position of strength, or, like Volvo, is being forced to act under great pressure." Data shows that during this earnings season, the number of S&P 500 constituent companies announcing large-scale restructuring plans is expected to increase by about 20% year-on-year. In Europe, the number of related announcements is roughly the same as twelve months ago.