What Happened?
A number of stocks jumped in the afternoon session after the SaaS sector continued to rally as favorable inflation data bolstered hopes for a Federal Reserve interest rate cut. This optimism was largely driven by a benign July Consumer Price Index (CPI) report, which solidified investor expectations for a Federal Reserve interest rate cut. Following the release of the inflation data, which showed a year-over-year increase of 2.7%, the probability of a rate cut in September surged to over 96%. Lower interest rates are typically beneficial for growth-oriented technology stocks, as they can reduce borrowing costs and increase the present value of future earnings. Adding to the positive sentiment was a 90-day delay in the imposition of higher tariffs on Chinese goods, which reduced trade-related uncertainty for the technology 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:
- Data Infrastructure company Elastic (NYSE: ESTC) jumped 3.9%. Is now the time to buy Elastic? Access our full analysis report here, it’s free.
- Content Delivery company Akamai (NASDAQ: AKAM) jumped 3.9%. Is now the time to buy Akamai? Access our full analysis report here, it’s free.
- Virtual Events Software company ON24 (NYSE: ONTF) jumped 3.6%. Is now the time to buy ON24? Access our full analysis report here, it’s free.
- Tax Software company BlackLine (NASDAQ: BL) jumped 3.1%. Is now the time to buy BlackLine? Access our full analysis report here, it’s free.
- Developer Operations company GitLab (NASDAQ: GTLB) jumped 4.2%. Is now the time to buy GitLab? Access our full analysis report here, it’s free.
Zooming In On GitLab (GTLB)
GitLab’s shares are extremely volatile and have had 32 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.
GitLab is down 26.4% since the beginning of the year, and at $41.50 per share, it is trading 43.3% below its 52-week high of $73.14 from February 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 $399.46.
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