What Happened?
A number of stocks jumped in the morning session after positive inflation data fueled hopes for an interest rate cut by the Federal Reserve.
The latest Consumer Price Index (CPI) report showed inflation rose by a modest 0.2% in July and 2.7% over the last year. This cooler-than-expected data prompted a significant market rally, with the S&P 500, Dow, and Nasdaq all climbing as investors grew more optimistic. The prevailing view is that easing inflation gives the central bank room to lower interest rates. Lower rates typically reduce borrowing costs for businesses and make stocks more attractive relative to bonds, contributing to widespread gains across sectors like healthcare.
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:
- Health Insurance Providers company Centene (NYSE:CNC) jumped 3.1%. Is now the time to buy Centene? Access our full analysis report here, it’s free.
- Testing & Diagnostics Services company RadNet (NASDAQ:RDNT) jumped 3.3%. Is now the time to buy RadNet? Access our full analysis report here, it’s free.
- Healthcare Technology for Providers company Evolent Health (NYSE:EVH) jumped 3.2%. Is now the time to buy Evolent Health? Access our full analysis report here, it’s free.
- Genomics & Sequencing company Illumina (NASDAQ:ILMN) jumped 3.1%. Is now the time to buy Illumina? Access our full analysis report here, it’s free.
- Drug Development Inputs & Services company Charles River Laboratories (NYSE:CRL) jumped 3.1%. Is now the time to buy Charles River Laboratories? Access our full analysis report here, it’s free.
Zooming In On RadNet (RDNT)
RadNet’s shares are quite volatile and have had 15 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 biggest move we wrote about over the last year was about 2 months ago when the stock gained 5.2% on the news that the major indices rebounded (Nasdaq +1.5%, S&P 500 +1.0%) as reports pointed to easing tensions between Israel and Iran. The Wall Street Journal said senior Iranian officials had signaled a willingness to restart stalled nuclear talks, on the condition that Washington refrain from joining Israel's ongoing strikes. This development triggered a significant decline in oil prices, easing inflation concerns. Also, it is possible some investors were buying the dip following the sell-off at the end of the previous week.
RadNet is down 9.5% since the beginning of the year, and at $63.49 per share, it is trading 26.5% below its 52-week high of $86.38 from November 2024. Investors who bought $1,000 worth of RadNet’s shares 5 years ago would now be looking at an investment worth $3,565.
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