What Happened?

A number of stocks jumped in the afternoon session after the major indices rebounded, as Fed Chair Jerome Powell delivered dovish remarks at the much-awaited Jackson Hole symposium. Powell suggested that with inflation risks moderating and unemployment remaining low, the Federal Reserve might consider a shift in its monetary policy stance, including potential interest rate cuts. This outlook eased market concerns about prolonged high interest rates and their impact on economic growth. The prospect of lower borrowing costs bolstered investor confidence, particularly in sectors that have lagged, leading to a broad rally across the market.

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:

• Payments Software company Marqeta (NASDAQ: MQ) jumped 3.7%. Is now the time to buy Marqeta? Access our full analysis report here, it’s free.
• Data Analytics company Samsara (NYSE: IOT) jumped 5.2%. Is now the time to buy Samsara? Access our full analysis report here, it’s free.
• Home Improvement Retailer company Home Depot (NYSE: HD) jumped 4%. Is now the time to buy Home Depot? Access our full analysis report here, it’s free.
• Department Store company Macy's (NYSE: M) jumped 3.8%. Is now the time to buy Macy's? Access our full analysis report here, it’s free.
• Home Furniture Retailer company Arhaus (NASDAQ: ARHS) jumped 4.2%. Is now the time to buy Arhaus? Access our full analysis report here, it’s free.

Zooming In On Samsara (IOT)

Samsara’s shares are very volatile and have had 21 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 8 days ago when the stock dropped 3% on the news that markets pulled back as a hotter-than-expected wholesale inflation report for July dampened hopes for a Federal Reserve interest rate cut. The U.S. Producer Price Index (PPI), a key measure of wholesale inflation, rose 0.9% month-over-month in July, far exceeding the 0.2% increase that economists had predicted. Annually, prices at the wholesale level jumped 3.3%, also surpassing the 2.5% forecast. This hotter-than-expected data has poured cold water on widespread expectations for an interest rate cut from the Federal Reserve next month. Persistent inflation makes it less likely for the central bank to ease monetary policy. Sectors with high-growth stocks, such as SaaS, are particularly sensitive to interest rate changes, as the prospect of higher rates for longer can diminish the present value of their future earnings, leading to a decline in stock prices.

Samsara is down 21.1% since the beginning of the year, and at $34.72 per share, it is trading 43% below its 52-week high of $60.96 from February 2025. Investors who bought $1,000 worth of Samsara’s shares at the IPO in December 2021 would now be looking at an investment worth $1,406.

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