What Happened?

A number of stocks jumped in the afternoon session after markets continued to rally as a surprisingly subdued inflation report fueled hopes for an imminent interest rate cut from the U.S. Federal Reserve. The July Consumer Price Index (CPI) report showed a year-over-year increase of 2.7%, which was slightly below market expectations. This tamer-than-expected inflation data was viewed by investors as a key signal that price pressures are easing. As a result, the market has strengthened its conviction that the U.S. Federal Reserve will implement an interest rate cut in September. The prospect of lower borrowing costs tends to boost corporate profitability and can stimulate economic activity, creating a more favorable environment for consumer-facing companies and fueling a broad-based market rally.

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:

• Personal Care company Estée Lauder (NYSE: EL) jumped 3.5%. Is now the time to buy Estée Lauder? Access our full analysis report here, it’s free.
• Beverages, Alcohol, and Tobacco company Vita Coco (NASDAQ: COCO) jumped 3.1%. Is now the time to buy Vita Coco? Access our full analysis report here, it’s free.
• Household Products company Spectrum Brands (NYSE: SPB) jumped 3.5%. Is now the time to buy Spectrum Brands? Access our full analysis report here, it’s free.
• Beverages, Alcohol, and Tobacco company Celsius (NASDAQ: CELH) jumped 3.1%. Is now the time to buy Celsius? Access our full analysis report here, it’s free.

Zooming In On Estée Lauder (EL)

Estée Lauder’s shares are quite volatile and have had 19 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.

Estée Lauder is up 28.4% since the beginning of the year, and at $95.01 per share, it is trading close to its 52-week high of $100.78 from September 2024. Investors who bought $1,000 worth of Estée Lauder’s shares 5 years ago would now be looking at an investment worth $445.28.

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