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% the previous 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:

• Outpatient & Specialty Care company Select Medical (NYSE: SEM) fell 3.8%. Is now the time to buy Select Medical? Access our full analysis report here, it’s free.
• Testing & Diagnostics Services company Guardant Health (NASDAQ: GH) fell 5%. Is now the time to buy Guardant Health? Access our full analysis report here, it’s free.
• Medical Devices & Supplies - Cardiology, Neurology, Vascular company Artivion (NYSE: AORT) fell 3.8%. Is now the time to buy Artivion? Access our full analysis report here, it’s free.
• Genomics & Sequencing company PacBio (NASDAQ: PACB) fell 5.7%. Is now the time to buy PacBio? Access our full analysis report here, it’s free.
• Surgical Equipment & Consumables - Specialty company Intuitive Surgical (NASDAQ: ISRG) fell 4.1%. Is now the time to buy Intuitive Surgical? Access our full analysis report here, it’s free.

Zooming In On PacBio (PACB)

PacBio’s shares are extremely volatile and have had 82 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 19 days ago when the stock gained 8.3% on the news that Federal Reserve Chair Jerome Powell opened the door to potential interest rate cuts. 

The broader market surged after Federal Reserve Chair Jerome Powell indicated that interest rates could be cut, sending the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite significantly higher. This positive market-wide sentiment was reflected in the life sciences space, with the biotech sector showing renewed vigor. As a company operating in the genome sequencing industry, PacBio benefited from the upbeat mood. The overall outlook for the DNA sequencing market remains strong, with projections suggesting robust growth in the coming years, further bolstering investor confidence in companies within the sector during periods of market optimism.

PacBio is down 31.7% since the beginning of the year, and at $1.23 per share, it is trading 53.6% below its 52-week high of $2.65 from November 2024. Investors who bought $1,000 worth of PacBio’s shares 5 years ago would now be looking at an investment worth $176.47.

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