What Happened?

A number of stocks jumped in the afternoon session after markets continued to rally amid growing speculation of an impending interest rate cut by the Federal Reserve. Following a favorable Consumer Price Index (CPI) report, investors are increasingly betting on a rate reduction next month, a sentiment amplified by U.S. Treasury Secretary Scott Bessent's call for a significant cut. This has fueled a 'risk-on' environment across Wall Street. Lower interest rates are typically beneficial for growth-oriented sectors like healthcare, as they reduce the cost of borrowing for research and innovation and increase the present value of future earnings.

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:

• Research Tools & Consumables company Sotera Health Company (NASDAQ: SHC) jumped 5%. Is now the time to buy Sotera Health Company? Access our full analysis report here, it’s free.
• Immuno-Oncology company Incyte (NASDAQ: INCY) jumped 5%. Is now the time to buy Incyte? Access our full analysis report here, it’s free.
• Immuno-Oncology company Exact Sciences (NASDAQ: EXAS) jumped 7.9%. Is now the time to buy Exact Sciences? Access our full analysis report here, it’s free.
• Medical Devices & Supplies - Specialty company Bausch + Lomb (NYSE: BLCO) jumped 3.1%. Is now the time to buy Bausch + Lomb? Access our full analysis report here, it’s free.
• Senior Health, Home Health & Hospice company Addus HomeCare (NASDAQ: ADUS) jumped 3.3%. Is now the time to buy Addus HomeCare? Access our full analysis report here, it’s free.

Zooming In On Exact Sciences (EXAS)

Exact Sciences’s shares are quite volatile and have had 18 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 26 days ago when the stock dropped 3% as several negative developments weighed on the sector. Weakness in managed care providers was a significant factor, with companies like Elevance Health and Humana seeing declines due to an analyst downgrade and a lost lawsuit regarding Medicare bonus payments, respectively. Additionally, some pharmaceutical and biotech companies experienced sharp drops following unfavorable news; for instance, Sarepta Therapeutics plunged after a report indicated another patient death tied to its experimental gene therapy, and GSK's blood cancer drug dosage was voted against by the FDA advisory committee. Broader market sentiment, including concerns about rising costs and inadequate pricing for 2025 plans among health insurers, also contributed to the downward pressure on healthcare equities.

Exact Sciences is down 20.8% since the beginning of the year, and at $45.10 per share, it is trading 37.3% below its 52-week high of $71.93 from October 2024. Investors who bought $1,000 worth of Exact Sciences’s shares 5 years ago would now be looking at an investment worth $517.20.

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