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:
- Shelf-Stable Food company Simply Good Foods (NASDAQ: SMPL) fell 2.6%. Is now the time to buy Simply Good Foods? Access our full analysis report here, it’s free.
- Personal Care company Edgewell Personal Care (NYSE: EPC) fell 3.4%. Is now the time to buy Edgewell Personal Care? Access our full analysis report here, it’s free.
- Household Products company Central Garden & Pet (NASDAQ: CENT) fell 3.1%. Is now the time to buy Central Garden & Pet? Access our full analysis report here, it’s free.
- Household Products company Spectrum Brands (NYSE: SPB) fell 3.2%. Is now the time to buy Spectrum Brands? Access our full analysis report here, it’s free.
- Perishable Food company Flowers Foods (NYSE: FLO) fell 2.9%. Is now the time to buy Flowers Foods? Access our full analysis report here, it’s free.
Zooming In On Edgewell Personal Care (EPC)
Edgewell Personal Care’s shares are not very volatile and have only had 9 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be 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 3.3% on the news that the stock moved higher amid a broad market rally fueled by hints from the Federal Reserve that interest rate cuts may be on the way. The broader market rallied, with the Dow Jones Industrial Average soaring over 900 points, after Federal Reserve Chair Jerome Powell hinted that interest rate cuts could be forthcoming. During a speech, Powell noted that the “balance of risks appear to be shifting,” which investors took as a strong signal for future monetary easing. This positive sentiment appeared to lift most stocks, including Edgewell.
Edgewell Personal Care is down 35.3% since the beginning of the year, and at $21.67 per share, it is trading 43.3% below its 52-week high of $38.25 from December 2024. Investors who bought $1,000 worth of Edgewell Personal Care’s shares 5 years ago would now be looking at an investment worth $765.45.
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