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% last 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:
- Sales Software company Salesforce (NYSE: CRM) fell 3.7%. Is now the time to buy Salesforce? Access our full analysis report here, it’s free.
- Content Delivery company Fastly (NYSE: FSLY) fell 4%. Is now the time to buy Fastly? Access our full analysis report here, it’s free.
Zooming In On Fastly (FSLY)
Fastly’s shares are extremely volatile and have had 42 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 13 days ago when the stock gained 3.2% after a wave of positive sentiment in the cloud sector as peer Snowflake (SNOW) posted strong quarterly results. Snowflake, a cloud software provider, reported better-than-expected second-quarter results and offered an optimistic outlook, boosting its fiscal 2026 product revenue projection. The company's CEO cited the 'enormous opportunity' presented by artificial intelligence, fueling investor confidence across the industry. The broader market also provided a favorable backdrop for technology stocks, with major indexes ending the previous session in positive territory as investors anticipated key earnings reports.
Fastly is down 20.2% since the beginning of the year, and at $7.35 per share, it is trading 35.2% below its 52-week high of $11.34 from December 2024. Investors who bought $1,000 worth of Fastly’s shares 5 years ago would now be looking at an investment worth $88.98.
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