What Happened?
A number of stocks jumped in the afternoon session after a key inflation report met expectations, bolstering hopes for a Federal Reserve interest rate cut, while a separate report indicated rising optimism among small businesses. The July Consumer Price Index (CPI) report showed annual inflation holding steady at 2.7%, aligning with forecasts and increasing the probability of a Federal Reserve interest rate cut to over 94%. Lower interest rates can stimulate the economy by making it cheaper for businesses to borrow and invest.
Further boosting confidence, the National Federation of Independent Business (NFIB) Small Business Optimism Index rose to a five-month high. This is a crucial indicator for the Business Services sector, as many of its companies cater to small and medium-sized enterprises. The combined positive data fueled a broad, "risk-on" sentiment, where investors favor economically sensitive sectors, leading to gains across IT services, staffing, and manufacturing.
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:
- Professional Staffing & HR Solutions company First Advantage (NASDAQ: FA) jumped 3.9%. Is now the time to buy First Advantage? Access our full analysis report here, it’s free.
- IT Distribution & Solutions company Insight Enterprises (NASDAQ: NSIT) jumped 4%. Is now the time to buy Insight Enterprises? Access our full analysis report here, it’s free.
- IT Distribution & Solutions company ePlus (NASDAQ: PLUS) jumped 3.3%. Is now the time to buy ePlus? Access our full analysis report here, it’s free.
- IT Distribution & Solutions company ScanSource (NASDAQ: SCSC) jumped 3.6%. Is now the time to buy ScanSource? Access our full analysis report here, it’s free.
- Professional Staffing & HR Solutions company Robert Half (NYSE: RHI) jumped 3.2%. Is now the time to buy Robert Half? Access our full analysis report here, it’s free.
Zooming In On Insight Enterprises (NSIT)
Insight Enterprises’s shares are not very volatile and have only had 6 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.
Insight Enterprises is down 14% since the beginning of the year, and at $128.52 per share, it is trading 42.8% below its 52-week high of $224.73 from October 2024. Investors who bought $1,000 worth of Insight Enterprises’s shares 5 years ago would now be looking at an investment worth $2,319.
Here at StockStory, we certainly understand the potential of thematic investing. Diverse winners from Microsoft (MSFT) to Alphabet (GOOG), Coca-Cola (KO) to Monster Beverage (MNST) could all have been identified as promising growth stories with a megatrend driving the growth. So, in that spirit, we’ve identified a relatively under-the-radar profitable growth stock benefiting from the rise of AI, available to you FREE via this link.
