What Happened?

A number of stocks fell in the afternoon session after broader macroeconomic concerns, including an ongoing government shutdown and anticipation of commentary from Federal Reserve officials, began to weigh on investor sentiment. 

After reaching new record highs, major U.S. indices like the S&P 500 and Nasdaq experienced a slight retreat. This pause came as investors grappled with the potential economic impact of a partial government shutdown, which had dampened consumer confidence and delayed the release of key economic data, such as September's nonfarm payrolls. The market appeared to be in a holding pattern as traders anticipated signals from Federal Reserve officials, looking for clues on future monetary policy. The caution in the broader market suggests that wider economic anxieties are currently overriding recent sector-specific optimism.

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:

• Electronic Components & Manufacturing company Knowles (NYSE: KN) fell 2.8%. Is now the time to buy Knowles? Access our full analysis report here, it’s free for active Edge members.
• Electronic Components & Manufacturing company Rogers (NYSE: ROG) fell 2.7%. Is now the time to buy Rogers? Access our full analysis report here, it’s free for active Edge members.
• IT Services & Consulting company Kyndryl (NYSE: KD) fell 3%. Is now the time to buy Kyndryl? Access our full analysis report here, it’s free for active Edge members.
• Professional Staffing & HR Solutions company First Advantage (NASDAQ: FA) fell 3.2%. Is now the time to buy First Advantage? Access our full analysis report here, it’s free for active Edge members.
• IT Services & Consulting company Gartner (NYSE: IT) fell 3.3%. Is now the time to buy Gartner? Access our full analysis report here, it’s free for active Edge members.

Zooming In On Gartner (IT)

Gartner’s shares are not very volatile and have only had 7 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.

The previous big move we wrote about was 26 days ago when the stock gained 3.3% on the news that 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, slightly more than economists expected. 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.

Gartner is down 48.8% since the beginning of the year, and at $247.41 per share, it is trading 55.2% below its 52-week high of $551.80 from November 2024. Investors who bought $1,000 worth of Gartner’s shares 5 years ago would now be looking at an investment worth $1,969.

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