What Happened?

A number of stocks jumped in the afternoon session after markets continued to rally as investor optimism grew for a potential Federal Reserve interest rate cut in September. This optimism was largely fueled by a recent consumer price index report that showed inflation easing, along with public comments from Treasury Secretary Scott Bessent advocating for a significant 50-basis-point rate cut. The prospect of lower borrowing costs tends to boost rate-sensitive sectors like Business Services, as it can encourage companies to increase spending on consulting, IT projects, and staffing.

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:

• Advertising & Marketing Services company Ibotta (NYSE: IBTA) jumped 3.6%. Is now the time to buy Ibotta? Access our full analysis report here, it’s free.
• Data & Business Process Services company Planet Labs (NYSE: PL) jumped 3.5%. Is now the time to buy Planet Labs? Access our full analysis report here, it’s free.
• Professional Staffing & HR Solutions company Alight (NYSE: ALIT) jumped 3.3%. Is now the time to buy Alight? Access our full analysis report here, it’s free.
• Traditional Media & Publishing company EchoStar (NASDAQ: SATS) jumped 3.6%. Is now the time to buy EchoStar? Access our full analysis report here, it’s free.
• Government & Technical Consulting company Maximus (NYSE: MMS) jumped 3%. Is now the time to buy Maximus? Access our full analysis report here, it’s free.

Zooming In On Ibotta (IBTA)

Ibotta’s shares are extremely volatile and have had 30 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 12 days ago when the stock dropped 3.5% on the news that a surprisingly weak U.S. jobs report was released, fueling concerns about a slowing economy. The U.S. economy added only 73,000 jobs, falling significantly short of economists' expectations, while figures for May and June were revised down, erasing 258,000 previously reported jobs. The professional and business services industry itself shed 14,000 jobs. This data points to a cooling labor market, fueling concerns of a slowing economy. A weaker economic outlook often leads to reduced corporate spending on key services like IT consulting and professional staffing, which directly impacts the sector's revenue and growth prospects. The report immediately increased investor expectations of an interest rate cut by the Federal Reserve.

Ibotta is down 60.5% since the beginning of the year, and at $26.35 per share, it is trading 65.7% below its 52-week high of $76.89 from October 2024. Investors who bought $1,000 worth of Ibotta’s shares at the IPO in April 2024 would now be looking at an investment worth $255.19.

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