What Happened?
A number of stocks fell in the afternoon session after markets pulled back with the decline concentrated in the tech space as investors engaged in profit-taking following a robust week that saw the S&P 500 hit a new record.
Adding to the pressure, new inflation data, specifically the Core PCE, showed an acceleration in July, signaling that rising prices remain a risk despite being in line with expectations. This confluence of factors, including market highs heading into a historically weak September, led to a pullback, with the Nasdaq Composite shedding 1.15%. While the Federal Reserve has hinted at potential rate cuts, the focus on inflation and the jobs market continues to influence investor sentiment.
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:
- Department Store company Dillard's (NYSE: DDS) fell 3.6%. Is now the time to buy Dillard's? Access our full analysis report here, it’s free.
- Broadcasting company iHeartMedia (NASDAQ: IHRT) fell 3.9%. Is now the time to buy iHeartMedia? Access our full analysis report here, it’s free.
- Specialized Technology company Arlo Technologies (NYSE: ARLO) fell 3.2%. Is now the time to buy Arlo Technologies? Access our full analysis report here, it’s free.
- Vehicle Retailer company America's Car-Mart (NASDAQ: CRMT) fell 3.4%. Is now the time to buy America's Car-Mart? Access our full analysis report here, it’s free.
- Personal Care company e.l.f. Beauty (NYSE: ELF) fell 3.8%. Is now the time to buy e.l.f. Beauty? 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 10 days ago when the stock dropped 3.1% on the news that investors took some profits off the table as markets awaited signals on future monetary policy from the Federal Reserve's Jackson Hole symposium later in the week.
The downturn in the market was largely attributed to a significant sell-off in megacap tech and chipmaker shares. Nvidia, Advanced Micro Devices (AMD), and Broadcom all saw notable drops, dragging down the VanEck Semiconductor ETF. Other major tech-related companies like Tesla, Meta Platforms, and Netflix were also under pressure. A key reason for this trend is that much of the recent market gains have been concentrated in the "AI trade," which includes these large technology and semiconductor companies. So this could also mean that some investors are locking in some gains ahead of more definitive feedback from the Fed.
iHeartMedia is up 5.4% since the beginning of the year, but at $2.13 per share, it is still trading 18.4% 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 $231.02.
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