What Happened?

A number of stocks fell in the afternoon session after markets continued to decline, as investors grew cautious ahead of a key speech by Federal Reserve Chair Jerome Powell. The move came as U.S. equity markets recorded a fifth consecutive day of losses for major indexes like the S&P 500, with technology stocks experiencing the largest declines. Investors have grown wary that the sharp rally in the tech sector since April may have advanced too far. The market-wide caution is largely driven by the upcoming Jackson Hole symposium, a meeting of central bankers, where traders are anxiously awaiting Fed Chair Powell's speech on Friday for guidance on the future path of interest rates.

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:

• HVAC and Water Systems company Lennox (NYSE: LII) fell 3.3%. Is now the time to buy Lennox? Access our full analysis report here, it’s free.
• Sports & Outdoor Equipment Retailer company Sportsman's Warehouse (NASDAQ: SPWH) fell 3.4%. Is now the time to buy Sportsman's Warehouse? Access our full analysis report here, it’s free.
• Modern Fast Food company CAVA (NYSE: CAVA) fell 3.4%. Is now the time to buy CAVA? Access our full analysis report here, it’s free.
• Shelf-Stable Food company TreeHouse Foods (NYSE: THS) fell 3.7%. Is now the time to buy TreeHouse Foods? Access our full analysis report here, it’s free.
• Healthcare Technology for Providers company Evolent Health (NYSE: EVH) fell 3.8%. Is now the time to buy Evolent Health? Access our full analysis report here, it’s free.

Zooming In On Evolent Health (EVH)

Evolent Health’s shares are extremely volatile and have had 40 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 8 days ago when the stock gained 3.8% on the news that 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.

Evolent Health is down 24.4% since the beginning of the year, and at $8.69 per share, it is trading 73.7% below its 52-week high of $32.97 from August 2024. Investors who bought $1,000 worth of Evolent Health’s shares 5 years ago would now be looking at an investment worth $649.10.

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