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:

• Banking Software company nCino (NASDAQ: NCNO) jumped 6.2%. Is now the time to buy nCino? Access our full analysis report here, it’s free.
• Data Infrastructure company C3.ai (NYSE: AI) jumped 9.2%. Is now the time to buy C3.ai? Access our full analysis report here, it’s free.
• Video Conferencing company Five9 (NASDAQ: FIVN) jumped 5.9%. Is now the time to buy Five9? Access our full analysis report here, it’s free.
• Data Analytics company Health Catalyst (NASDAQ: HCAT) jumped 7.5%. Is now the time to buy Health Catalyst? Access our full analysis report here, it’s free.
• Video Conferencing company RingCentral (NYSE: RNG) jumped 8.4%. Is now the time to buy RingCentral? Access our full analysis report here, it’s free.

Zooming In On C3.ai (AI)

C3.ai’s shares are extremely volatile and have had 39 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.

C3.ai is down 46.4% since the beginning of the year, and at $18.60 per share, it is trading 56.7% below its 52-week high of $42.94 from December 2024. Investors who bought $1,000 worth of C3.ai’s shares at the IPO in December 2020 would now be looking at an investment worth $201.10.

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