What Happened?
A number of stocks fell in the afternoon session after investors took profits following a significant rally the previous day.
Software stocks pulled back after one of the sharpest sector recoveries on record. The iShares Expanded Tech-Software ETF gained 15% across the prior three sessions — its best such run ever — while ServiceNow completed a nearly 40% rally in just four sessions from its April lows. With gains of that magnitude in that timeframe, profit-taking is the natural response. The S&P 500 software and services sector fell approximately 3.78% on the day.
Critically, the broader market provided no significant selling pressure as the S&P 500 was essentially flat, the Nasdaq barely changed, and the Dow edged marginally higher. This was sector-level digestion, not a broad risk-off move. Salesforce surrendered nearly half of the previous day's 10%-plus surge as worries about Anthropic's upcoming IPO and Google's $80 billion equity raise added pressure to the rerating. CrowdStrike slipped as pre-earnings caution set in ahead of the June 3 print — the stock rose approximately 70% year-to-date as options markets priced in a 9.5% swing on the result.
The sector's underlying thesis remained intact: the SaaSpocalypse narrative broke, and many names continued to trade well below their 52-week highs. The pullback was the market catching its breath before the next round of data, not reversing course.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Project Management Software company monday.com (NASDAQ: MNDY) fell 5.4%. Is now the time to buy monday.com? Access our full analysis report here, it’s free.
- Video Conferencing company RingCentral (NYSE: RNG) fell 5.7%. Is now the time to buy RingCentral? Access our full analysis report here, it’s free.
- Tax Software company BlackLine (NASDAQ: BL) fell 5.6%. Is now the time to buy BlackLine? Access our full analysis report here, it’s free.
Zooming In On RingCentral (RNG)
RingCentral’s shares are extremely volatile and have had 34 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 18 days ago when the stock gained 4.1% on the news that President Trump's state visit to Beijing lifted market sentiment across tech, with the S&P hitting a record high above 7,500 for the first. While the Trump-Xi summit produced fewer concrete deals than investors had hoped for, the general mood around US-China trade relations shifted from confrontational to cautiously constructive and for a sector as globally exposed as software, that reduction in uncertainty was enough to drive buyers back in. Adding to the positive sentiment, Figma posted 46% revenue growth with early AI monetisation showing genuine traction, and ServiceNow announced a multi-year AI partnership with Experian. Each print reinforced the same thesis: that enterprise software companies are successfully embedding AI into their products and charging for it, rather than being disrupted by it, a concern that had weighed heavily on the sector earlier in the year.
RingCentral is up 67.2% since the beginning of the year, and at $46.14 per share, it is trading close to its 52-week high of $49.10 from May 2026. Despite the year-to-date gain, investors who bought $1,000 worth of RingCentral’s shares 5 years ago would now be looking at only $180.08.
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