What Happened?
A number of stocks fell in the afternoon session after the major indices continued to pull back, with technology stocks accounting for most of the market's largest decliners. A key reason for this trend is that much of the recent market gains were concentrated in the "AI trade," which includes these large technology and semiconductor companies. So this could also mean that some investors are locking in some gains ahead of more definitive feedback from the Fed.
Despite the downturn, some analysts viewed this as an opportunity to own some of the "Core AI winners." Dan Ives of Wedbush Securities commented, "In our view, the tech bull cycle will be well intact for at least another 2-3 years, given the trillions being spent on AI infrastructure/software/chips/power/apps looking ahead. This remains our tech playbook and investor roadmap." Additionally, mixed earnings reports from retailers, such as Target, have added to the market's weakness. Investors are closely monitoring these reports for insights into the broader economic health and the potential impact of new tariffs on inflation.
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:
- Wireless, Cable and Satellite company Sirius XM (NASDAQ: SIRI) fell 3.7%. Is now the time to buy Sirius XM? Access our full analysis report here, it’s free.
- Home Furnishings company Lovesac (NASDAQ: LOVE) fell 4.1%. Is now the time to buy Lovesac? Access our full analysis report here, it’s free.
- Electronic Components & Manufacturing company Rogers (NYSE: ROG) fell 4.2%. Is now the time to buy Rogers? Access our full analysis report here, it’s free.
- Healthcare Technology for Patients company Tandem Diabetes (NASDAQ: TNDM) fell 5.5%. Is now the time to buy Tandem Diabetes? Access our full analysis report here, it’s free.
- Wireless, Cable and Satellite company Altice (NYSE: ATUS) fell 4.9%. Is now the time to buy Altice? Access our full analysis report here, it’s free.
Zooming In On Tandem Diabetes (TNDM)
Tandem Diabetes’s shares are extremely volatile and have had 32 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 7 days ago when the stock gained 3.2% on the news that markets continued to rally amid growing speculation of an impending interest rate cut by the Federal Reserve. Following a favorable Consumer Price Index (CPI) report, investors are increasingly betting on a rate reduction next month, a sentiment amplified by U.S. Treasury Secretary Scott Bessent's call for a significant cut. This has fueled a 'risk-on' environment across Wall Street. Lower interest rates are typically beneficial for growth-oriented sectors like healthcare, as they reduce the cost of borrowing for research and innovation and increase the present value of future earnings.
Tandem Diabetes is down 70.9% since the beginning of the year, and at $10.42 per share, it is trading 77.1% below its 52-week high of $45.57 from August 2024. Investors who bought $1,000 worth of Tandem Diabetes’s shares 5 years ago would now be looking at an investment worth $94.78.
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