What Happened?
A number of stocks fell in the afternoon session after the latest Consumer Price Index (CPI) report came in hotter than expected, signaling that inflation remained stubbornly high.
The April CPI data revealed a 3.8% annual increase, surpassing economists' forecasts. This report is a key measure of inflation, tracking the average change in prices paid by consumers for goods and services. The persistent inflation is significant because it dampens expectations for the Federal Reserve to cut interest rates.
Higher interest rates for a longer period tend to negatively impact growth-oriented sectors like technology and software, as they make the companies' future earnings less valuable in today's terms. With the prospect of rate cuts diminishing, investors reassessed valuations, leading to a broad sell-off across the tech sector.
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:
- Marketing Software company Upland Software (NASDAQ: UPLD) fell 5.5%. Is now the time to buy Upland Software? Access our full analysis report here, it’s free.
- Developer Operations company GitLab (NASDAQ: GTLB) fell 7.1%. Is now the time to buy GitLab? Access our full analysis report here, it’s free.
- E-commerce Software company Wix (NASDAQ: WIX) fell 3.7%. Is now the time to buy Wix? Access our full analysis report here, it’s free.
- Video Conferencing company 8x8 (NASDAQ: EGHT) fell 4.8%. Is now the time to buy 8x8? Access our full analysis report here, it’s free.
- Data Infrastructure company C3.ai (NYSE: AI) fell 5.1%. Is now the time to buy C3.ai? Access our full analysis report here, it’s free.
Zooming In On GitLab (GTLB)
GitLab’s shares are extremely volatile and have had 36 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 11 days ago when the stock gained 5% on the news that strong earnings and upbeat forecasts from several peers boosted the broader software sector.
The gains appeared driven by positive sentiment across the software-as-a-service (SaaS) space. For instance, enterprise software maker Atlassian saw its shares surge after lifting its annual forecast, which in turn lifted peers like Salesforce and ServiceNow.
Similarly, Twilio's stock jumped after it reported first-quarter revenue that beat estimates and raised its own forecast, with its CEO highlighting artificial intelligence as a catalyst. This positive news from peers helped create a favorable environment for software stocks, which some strategists noted had been underperforming the broader market and were potentially positioned for a comeback.
GitLab is down 34.8% since the beginning of the year, and at $23.57 per share, it is trading 55.9% below its 52-week high of $53.43 from May 2025. Investors who bought $1,000 worth of GitLab’s shares at the IPO in October 2021 would now be looking at an investment worth $226.93.
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