What Happened?

A number of stocks jumped in the afternoon session after a key inflation report came in cooler than anticipated, fueling hopes for a shift in the Federal Reserve's interest rate policy. The latest Consumer Price Index (CPI) report showed a 3.0% year-over-year increase, slightly below the 3.1% that analysts had expected. This moderation in inflation is a significant signal for investors, suggesting that price pressures may be easing. For the tech sector, which is often sensitive to interest rate changes, this news was particularly welcome. Softer inflation could give the Federal Reserve the flexibility to pause or even begin cutting interest rates. Lower rates reduce borrowing costs for growth-oriented tech companies and increase the present value of their future earnings, making their stocks more attractive to investors.

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:

• Design Software company Cadence Design Systems (NASDAQ: CDNS) jumped 3.3%. Is now the time to buy Cadence Design Systems? Access our full analysis report here, it’s free for active Edge members.
• Video Conferencing company 8x8 (NASDAQ: EGHT) jumped 3.2%. Is now the time to buy 8x8? Access our full analysis report here, it’s free for active Edge members.

Zooming In On Cadence Design Systems (CDNS)

Cadence Design Systems’s shares are quite volatile and have had 15 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 14 days ago when the stock dropped 5.4% on the news that President Trump threatened to increase import taxes on Chinese goods, reigniting trade war fears. The threat was in response to China's move to restrict its exports of rare earth minerals, which are critical to high-tech manufacturing in the U.S. The unexpected announcement shattered a monthslong calm on Wall Street, sending major indices tumbling. The S&P 500 dropped around 1.3%, while the tech-heavy Nasdaq Composite fell 2.7%. Investors reacted by selling off stocks, particularly in the technology and retail sectors, amid concerns that escalating trade tensions could disrupt global supply chains and increase costs for companies.

Cadence Design Systems is up 16% since the beginning of the year, and at $345.26 per share, it is trading close to its 52-week high of $373.37 from September 2025. Investors who bought $1,000 worth of Cadence Design Systems’s shares 5 years ago would now be looking at an investment worth $3,142.

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