What Happened?

A number of stocks fell in the afternoon session after markets pulled back, reversing early gains, as investor sentiment remained cautious despite a softer-than-expected inflation reading. 

Stocks rose in the morning session after an unexpected drop in the Producer Price Index (PPI) for August signaled easing inflation and raised expectations for a potential Federal Reserve interest rate cut. The U.S. Bureau of Labor Statistics reported that the PPI, which measures wholesale prices, edged down 0.1% the previous month, contrary to analyst expectations for a 0.3% rise. This data gives the Federal Reserve more flexibility to consider lowering interest rates to stimulate the economy.

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:

• Broadcasting company iHeartMedia (NASDAQ: IHRT) fell 6.4%. Is now the time to buy iHeartMedia? Access our full analysis report here, it’s free.
• Education Services company Universal Technical Institute (NYSE: UTI) fell 3%. Is now the time to buy Universal Technical Institute? Access our full analysis report here, it’s free.
• Travel and Vacation Providers company Wyndham (NYSE: WH) fell 2.9%. Is now the time to buy Wyndham? Access our full analysis report here, it’s free.
• Footwear company Crocs (NASDAQ: CROX) fell 3.2%. Is now the time to buy Crocs? Access our full analysis report here, it’s free.
• Travel and Vacation Providers company Sabre (NASDAQ: SABR) fell 2.6%. Is now the time to buy Sabre? Access our full analysis report here, it’s free.

Zooming In On iHeartMedia (IHRT)

iHeartMedia’s shares are extremely volatile and have had 73 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 5 days ago when the stock dropped 7.5% on the news that a surprisingly weak August jobs report fueled concerns of a cooling economy but also raised expectations for Federal Reserve interest rate cuts. The U.S. economy added a mere 22,000 jobs last month, a significant miss from the 75,000 analysts had projected, according to the Bureau of Labor Statistics. This figure represents a notable slowdown in the labor market. While such a sharp decline in job growth can be a bearish signal for the economy, investors are now betting it will force the Federal Reserve's hand. As noted by one economist, the market's initial reaction seems to be more focused on the increased likelihood of Fed rate cuts rather than the immediate concerns about economic cooling, with a September cut now seen as fully priced in.

iHeartMedia is up 6.4% since the beginning of the year, but at $2.15 per share, it is still trading 17.6% below its 52-week high of $2.61 from December 2024. Investors who bought $1,000 worth of iHeartMedia’s shares 5 years ago would now be looking at an investment worth $234.20.

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