What Happened?
A number of stocks jumped in the afternoon session after the Consumer Price Index (CPI) report bolstered expectations for a Federal Reserve interest rate cut despite showing persistent inflation.
The August CPI data, a key measure of inflation, showed prices rose 2.9% annually, in line with expectations. While inflation remains above the Federal Reserve's 2% target, investors were focusing on other signs of a cooling economy, particularly a weakening labor market. As a result, the market widely anticipated that the Fed would cut interest rates at its September meeting to support the economy. Investors priced in multiple rate cuts by year-end, which boosted market sentiment and sent Treasury yields lower.
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:
- Data & Business Process Services company TransUnion (NYSE: TRU) jumped 3.7%. Is now the time to buy TransUnion? Access our full analysis report here, it’s free.
- Specialized Technology company Mirion (NYSE: MIR) jumped 3.1%. Is now the time to buy Mirion? Access our full analysis report here, it’s free.
- Industrial & Environmental Services company Vestis (NYSE: VSTS) jumped 7%. Is now the time to buy Vestis? Access our full analysis report here, it’s free.
- Office & Commercial Furniture company MillerKnoll (NASDAQ: MLKN) jumped 3.1%. Is now the time to buy MillerKnoll? Access our full analysis report here, it’s free.
- Safety & Security Services company GEO Group (NYSE: GEO) jumped 7.1%. Is now the time to buy GEO Group? Access our full analysis report here, it’s free.
Zooming In On GEO Group (GEO)
GEO Group’s shares are very volatile and have had 29 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 21 days ago when the stock dropped 3.3% on the news that markets continued to decline, as investors grew cautious ahead of a key speech by Federal Reserve Chair Jerome Powell. The move came as U.S. equity markets recorded a fifth consecutive day of losses for major indexes like the S&P 500, with technology stocks experiencing the largest declines. Investors have grown wary that the sharp rally in the tech sector since April may have advanced too far.
GEO Group is down 19.1% since the beginning of the year, and at $22.90 per share, it is trading 35.2% below its 52-week high of $35.35 from January 2025. Investors who bought $1,000 worth of GEO Group’s shares 5 years ago would now be looking at an investment worth $2,101.
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