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:
- Perishable Food company Beyond Meat (NASDAQ: BYND) fell 3.1%. Is now the time to buy Beyond Meat? Access our full analysis report here, it’s free.
- Shelf-Stable Food company BellRing Brands (NYSE: BRBR) fell 2.6%. Is now the time to buy BellRing Brands? Access our full analysis report here, it’s free.
- Perishable Food company Calavo (NASDAQ: CVGW) fell 2.8%. Is now the time to buy Calavo? Access our full analysis report here, it’s free.
- Personal Care company e.l.f. Beauty (NYSE: ELF) fell 4.1%. Is now the time to buy e.l.f. Beauty? Access our full analysis report here, it’s free.
- Beverages, Alcohol, and Tobacco company Tilray (NASDAQ: TLRY) fell 5%. Is now the time to buy Tilray? Access our full analysis report here, it’s free.
Zooming In On Tilray (TLRY)
Tilray’s shares are extremely volatile and have had 71 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 2 days ago when the stock dropped 7.2% as investors weighed data showing a high level of short interest in the company, suggesting negative market sentiment. Short interest is the number of shares that have been sold short but have not yet been covered or closed out. A high short interest can indicate that investors are pessimistic about a stock's future prospects. According to a recent report, Tilray's short percent of float has declined by 20.06%.
Tilray is down 26% since the beginning of the year, and at $1.08 per share, it is trading 40.3% below its 52-week high of $1.81 from September 2024.
Unless you’ve been living under a rock, it should be obvious by now that generative AI is going to have a huge impact on how large corporations do business. While Nvidia and AMD are trading close to all-time highs, we prefer a lesser-known (but still profitable) semiconductor stock benefiting from the rise of AI. Click here to access our free report on our favorite semiconductor growth story.
