What Happened?
A number of stocks jumped in the afternoon session after the Consumer Price Index (CPI) report bolstered expectations for a Federal Reserve interest rate cut despite showing persistent inflation.
The August CPI data, a key measure of inflation, showed prices rose 2.9% annually, in line with expectations. While inflation remains above the Federal Reserve's 2% target, investors were focusing on other signs of a cooling economy, particularly a weakening labor market. As a result, the market widely anticipated that the Fed would cut interest rates at its September meeting to support the economy. Investors priced in multiple rate cuts by year-end, which boosted market sentiment and sent Treasury yields lower.
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:
- Office & Commercial Furniture company Interface (NASDAQ: TILE) jumped 2.9%. Is now the time to buy Interface? Access our full analysis report here, it’s free.
- Terrestrial Telecommunication Services company Lumen (NYSE: LUMN) jumped 0.9%. Is now the time to buy Lumen? Access our full analysis report here, it’s free.
- Satellite Telecommunication Services company Iridium (NASDAQ: IRDM) jumped 2.5%. Is now the time to buy Iridium? Access our full analysis report here, it’s free.
- Terrestrial Telecommunication Services company Cogent (NASDAQ: CCOI) jumped 2.8%. Is now the time to buy Cogent? Access our full analysis report here, it’s free.
- Data & Business Process Services company Equifax (NYSE: EFX) jumped 6.4%. Is now the time to buy Equifax? Access our full analysis report here, it’s free.
Zooming In On Equifax (EFX)
Equifax’s shares are somewhat volatile and have had 10 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 9 days ago when the stock dropped 4% on the news that the major indices continued to retreat (Nasdaq -1.5%, S&P 500 -1.2%) amid profit-taking and renewed concerns about tariffs. Investors reacted to a federal court ruling that most of President Trump's global tariffs were illegal, raising uncertainty over trade policy and the fiscal impact of potential refunds. Rising Treasury yields added to the pressure, with the 10-year climbing above 4.2% and the 30-year nearing 5%, intensifying worries about stretched equity valuations. September's historically weak track record for stocks further dampened sentiment, leaving traders cautious ahead of the jobs report later in the week and the Federal Reserve's upcoming rate decision.
Equifax is up 3.6% since the beginning of the year, but at $260.23 per share, it is still trading 15.2% below its 52-week high of $306.75 from September 2024. Investors who bought $1,000 worth of Equifax’s shares 5 years ago would now be looking at an investment worth $1,601.
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