What Happened?
A number of stocks jumped in the afternoon session after the latest Personal Consumption Expenditures (PCE) inflation report met expectations, bolstering investor confidence in potential future interest rate cuts by the Federal Reserve.
The August 2025 report, which is the Federal Reserve's preferred gauge for inflation, showed a slight year-over-year acceleration but crucially did not exceed economists' forecasts. This 'in-line' result was met with relief across the market, sending the Dow Jones Industrial Average up by approximately 300 points. Investors interpreted the data as a sign that the Fed's current monetary policy is effectively managing inflation. The news strengthens the case for the central bank to reduce interest rates in the future, fostering broader optimism about the U.S. economy's resilience.
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:
- Consumer Subscription company Chegg (NYSE: CHGG) jumped 5.5%. Is now the time to buy Chegg? Access our full analysis report here, it’s free.
- Online Marketplace company Teladoc (NYSE: TDOC) jumped 4.6%. Is now the time to buy Teladoc? Access our full analysis report here, it’s free.
- Video Gaming company Skillz (NYSE: SKLZ) jumped 4.5%. Is now the time to buy Skillz? Access our full analysis report here, it’s free.
- Video Gaming company Take-Two (NASDAQ: TTWO) jumped 2.9%. Is now the time to buy Take-Two? Access our full analysis report here, it’s free.
- Online Travel company Expedia (NASDAQ: EXPE) jumped 3.7%. Is now the time to buy Expedia? Access our full analysis report here, it’s free.
Zooming In On Chegg (CHGG)
Chegg’s shares are extremely volatile and have had 102 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 4 days ago when the stock gained 8.7% after a broad rally in technology stocks fueled by renewed optimism around artificial intelligence (AI).
The positive mood swept through the market as big tech stocks gained, boosting investor confidence in AI-related companies. This sector-wide lift likely cast a favorable light on Chegg, given the education technology company's own focus on AI. Chegg had previously announced plans to launch two new core capabilities designed to enhance its Chegg Study service into a personalized learning coach. This strategic direction positioned the company to benefit from the broader enthusiasm surrounding the AI space, attracting investor interest.
Chegg is down 7.1% since the beginning of the year, and at $1.56 per share, it is trading 41.1% below its 52-week high of $2.65 from December 2024. Investors who bought $1,000 worth of Chegg’s shares 5 years ago would now be looking at an investment worth $22.04.
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