What Happened?

A number of stocks jumped in the afternoon session after a cooler-than-expected inflation report fueled optimism for potential Federal Reserve rate cuts. 

The September Consumer Price Index (CPI) rose 3.0% year-over-year, coming in just below the 3.1% analysts had forecast. While still above the Federal Reserve's 2% target, investors interpreted the slight cooling as a sign that inflationary pressures may be easing, potentially giving the central bank room to consider interest rate cuts in the near future. Sectors that are typically sensitive to interest rates, such as real estate and utilities, saw a notable lift. Lower rates can reduce borrowing costs and increase the appeal of dividend-paying stocks, boosting investor confidence in these areas.

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:

• Media company fuboTV (NYSE: FUBO) jumped 1.3%. Is now the time to buy fuboTV? Access our full analysis report here, it’s free for active Edge members.
• Broadcasting company iHeartMedia (NASDAQ: IHRT) jumped 2.3%. Is now the time to buy iHeartMedia? Access our full analysis report here, it’s free for active Edge members.
• Gaming Solutions company Inspired (NASDAQ: INSE) jumped 0.9%. Is now the time to buy Inspired? Access our full analysis report here, it’s free for active Edge members.
• Toys and Electronics company Bark (NYSE: BARK) jumped 2.1%. Is now the time to buy Bark? Access our full analysis report here, it’s free for active Edge members.
• Real Estate Services company Compass (NYSE: COMP) jumped 4.9%. Is now the time to buy Compass? Access our full analysis report here, it’s free for active Edge members.

Zooming In On Compass (COMP)

Compass’s shares are very volatile and have had 20 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 17 days ago when the stock dropped 2.9% after a collection of negative economic reports pointed to a weakening economy, raising concerns about consumer spending and the housing market. A survey from the New York Fed revealed that households' short-term inflation expectations rose, while their outlook on the labor market worsened. Consumers expressed greater worry about potential job losses and expected lower earnings growth. Adding to the negative mood, an economist from Moody's Analytics warned that 22 states showed clear signs of a recession, putting the wider U.S. economy in a fragile position. A U.S. government shutdown also dampened sentiment, threatening to affect incomes and buying power while delaying key economic data.

Compass is up 37.1% since the beginning of the year, but at $7.95 per share, it is still trading 22.4% below its 52-week high of $10.24 from February 2025. Investors who bought $1,000 worth of Compass’s shares at the IPO in March 2021 would now be looking at an investment worth $394.54.

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