What Happened?
A number of stocks fell in the afternoon session after the major indices pulled back (Nasdaq -1.3%, S&P 500 - 1.4%) as Treasury yields rose, reflecting market anxiety over a draft federal budget that could worsen the already wide US fiscal deficit. A poor auction for 20-year U.S. Treasury bonds further raised concerns, as weak demand implies investors are becoming more cautious about holding long-dated U.S. debt.
As a reminder, the driver of a stock's value is the sum of its future cash flows discounted back to today. With lower interest rates (yields), investors can apply higher valuations to their stocks; when yields rise, that math works in reverse.
Adding to the cautious mood were earnings results from retail giants Target and Lowe's, both of which reported weak earnings that missed expectations, pointing to a potential slowdown in consumer spending and further weighing on sentiment.
Lastly, some influential voices such as Jamie Dimon (JPMorgan) and Steve Cohen (Point72) have made cautious comments about the market, which can sometimes become self-fulfilling prophecies as investors increase their cautiousness and skittishness.
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:
- Vehicle Parts Distributors company FTAI Aviation (NASDAQ: FTAI) fell 5.5%. Is now the time to buy FTAI Aviation? Access our full analysis report here, it’s free.
- Professional Tools and Equipment company Hillman (NASDAQ: HLMN) fell 5%. Is now the time to buy Hillman? Access our full analysis report here, it’s free.
- Renewable Energy company Bloom Energy (NYSE: BE) fell 5.4%. Is now the time to buy Bloom Energy? Access our full analysis report here, it’s free.
- Ground Transportation company Hertz (NASDAQ: HTZ) fell 5.6%. Is now the time to buy Hertz? Access our full analysis report here, it’s free.
- Custom Parts Manufacturing company 3D Systems (NYSE: DDD) fell 5.5%. Is now the time to buy 3D Systems? Access our full analysis report here, it’s free.
Zooming In On Hertz (HTZ)
Hertz’s shares are extremely volatile and have had 81 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 biggest move we wrote about over the last year was about 1 month ago when the stock gained 57.9% as reports revealed that Bill Ackman's Pershing Square had an even bigger stake in the company a day after the hedge fund acquired $46.5m of the company's stock. Notably, CNBC reported that Pershing Square's total position was about 19.8%, including shares and swaps, making it the company's second-largest shareholder.
Hertz is up 67.6% since the beginning of the year, but at $6.25 per share, it is still trading 27.7% below its 52-week high of $8.65 from April 2025. Investors who bought $1,000 worth of Hertz’s shares at the IPO in June 2021 would now be looking at an investment worth $231.57.
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