What Happened?

A number of stocks fell in the afternoon session after markets pulled back, reversing early gains, as investor sentiment remained cautious despite a softer-than-expected inflation reading. 

Stocks rose in the morning session after an unexpected drop in the Producer Price Index (PPI) for August signaled easing inflation and raised expectations for a potential Federal Reserve interest rate cut. The U.S. Bureau of Labor Statistics reported that the PPI, which measures wholesale prices, edged down 0.1% last month, contrary to analyst expectations for a 0.3% rise. This data gives the Federal Reserve more flexibility to consider lowering interest rates to stimulate the economy.

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:

• Data Analytics company Amplitude (NASDAQ: AMPL) fell 3.3%. Is now the time to buy Amplitude? Access our full analysis report here, it’s free.
• Cloud Monitoring company Dynatrace (NYSE: DT) fell 5.3%. Is now the time to buy Dynatrace? Access our full analysis report here, it’s free.
• Advertising Software company PubMatic (NASDAQ: PUBM) fell 4.7%. Is now the time to buy PubMatic? Access our full analysis report here, it’s free.
• Marketing Software company Upland Software (NASDAQ: UPLD) fell 4.5%. Is now the time to buy Upland Software? Access our full analysis report here, it’s free.
• Automation Software company SoundHound AI (NASDAQ: SOUN) fell 4.9%. Is now the time to buy SoundHound AI? Access our full analysis report here, it’s free.

Zooming In On Dynatrace (DT)

Dynatrace’s shares are not very volatile and have only had 9 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 14 days ago when the stock gained 3.1% on the news that investment firm Oppenheimer initiated coverage on the stock with an Outperform rating and a $65 price target. Oppenheimer's positive outlook is based on Dynatrace's position as a leading observability software vendor, powered by its Grail data lakehouse and Davis AI engine. The firm highlighted several key drivers for its bullish view, including the potential for accelerated revenue growth, evolving sales strategies, and favorable market dynamics that could lead to market share gains. Oppenheimer also pointed to emerging opportunities in log management and security. The firm believes that current consensus projections for Dynatrace are too low, suggesting a strong possibility for a growth re-rating and expansion of the stock's multiple.

Dynatrace is down 12.3% since the beginning of the year, and at $47.64 per share, it is trading 23.7% below its 52-week high of $62.42 from February 2025. Investors who bought $1,000 worth of Dynatrace’s shares 5 years ago would now be looking at an investment worth $1,218.

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