What Happened?
A number of stocks jumped in the afternoon session after the latest Consumer Price Index (CPI) report came in largely as expected, reinforcing investor hopes for an upcoming Federal Reserve interest rate cut.
Data from the Bureau of Labor Statistics showed headline inflation for August at a 2.9% annual rate, with core inflation, which excludes volatile food and energy prices, holding steady at 3.1%. While inflation remains above the Federal Reserve's target, Wall Street interpreted the figures as not being high enough to prevent a widely anticipated rate reduction at the central bank's meeting next week. Analysts note that the Fed's focus has shifted toward the risks of a cooling labor market. With this report being the last key data point before the meeting, the market's conviction for a rate cut strengthened, fueling a broad rally that pushed major U.S. stock indexes to record highs.
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:
- Specialized Consumer Services company Frontdoor (NASDAQ: FTDR) jumped 4.9%. Is now the time to buy Frontdoor? Access our full analysis report here, it’s free.
- Specialized Consumer Services company WeightWatchers (NASDAQ: WW) jumped 3.5%. Is now the time to buy WeightWatchers? Access our full analysis report here, it’s free.
- Leisure Facilities company European Wax Center (NASDAQ: EWCZ) jumped 5.7%. Is now the time to buy European Wax Center? Access our full analysis report here, it’s free.
- Real Estate Services company Zillow (NASDAQ: ZG) jumped 4.2%. Is now the time to buy Zillow? Access our full analysis report here, it’s free.
- Broadcasting company Paramount (NASDAQ: PSKY) jumped 10.3%. Is now the time to buy Paramount? Access our full analysis report here, it’s free.
Zooming In On Paramount (PSKY)
Paramount’s shares are not very volatile and have only had 9 moves greater than 5% over the last year. Moves this big are rare for Paramount and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 8 days ago when the stock gained 3.1% on the news that the company announced a major film deal with Microsoft-owned Activision to bring the popular “Call of Duty” video game franchise to the big screen.
Under the agreement, Paramount will develop, produce, and distribute a live-action feature film based on the iconic first-person shooter series. The media company stated it aims to deliver an "unforgettable cinematic event" for fans of the video game and new audiences alike. Paramount CEO David Ellison, a self-described lifelong fan of the franchise, emphasized the company's commitment to honoring the brand's legacy. He stated, “We’re approaching this film with the same disciplined, uncompromising commitment to excellence that guided our work on Top Gun: Maverick.” The partnership aims to leverage the massive intellectual property of "Call of Duty," which has been a major franchise since 2003.
Paramount is up 64.6% since the beginning of the year, and at $17.41 per share, has set a new 52-week high. Investors who bought $1,000 worth of Paramount’s shares 5 years ago would now be looking at an investment worth $594.60.
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