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:
- Hardware & Infrastructure company Xerox (NASDAQ: XRX) jumped 2.5%. Is now the time to buy Xerox? Access our full analysis report here, it’s free.
- Professional Staffing & HR Solutions company First Advantage (NASDAQ: FA) jumped 3.5%. Is now the time to buy First Advantage? Access our full analysis report here, it’s free.
- IT Services & Consulting company Gartner (NYSE: IT) jumped 3.3%. Is now the time to buy Gartner? Access our full analysis report here, it’s free.
- Specialized Technology company Arlo Technologies (NYSE: ARLO) jumped 2.5%. Is now the time to buy Arlo Technologies? Access our full analysis report here, it’s free.
- IT Services & Consulting company ASGN (NYSE: ASGN) jumped 3.7%. Is now the time to buy ASGN? Access our full analysis report here, it’s free.
Zooming In On ASGN (ASGN)
ASGN’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 20 days ago when the stock gained 5.4% on the news that the major indices rebounded, as Fed Chair Jerome Powell delivered dovish remarks at the much-awaited Jackson Hole symposium. Powell suggested that with inflation risks moderating and unemployment remaining low, the Federal Reserve might consider a shift in its monetary policy stance, including potential interest rate cuts. This outlook eased market concerns about prolonged high interest rates and their impact on economic growth. The prospect of lower borrowing costs bolstered investor confidence, particularly in sectors that have lagged, leading to a broad rally across the market.
ASGN is down 37.1% since the beginning of the year, and at $52.13 per share, it is trading 48.3% below its 52-week high of $100.79 from November 2024. Investors who bought $1,000 worth of ASGN’s shares 5 years ago would now be looking at an investment worth $741.22.
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