What Happened?

A number of stocks jumped in the afternoon session after the SaaS sector continued to rally as favorable inflation data bolstered hopes for a Federal Reserve interest rate cut. This optimism was largely driven by a benign July Consumer Price Index (CPI) report, which solidified investor expectations for a Federal Reserve interest rate cut. Following the release of the inflation data, which showed a year-over-year increase of 2.7%, the probability of a rate cut in September surged to over 96%. Lower interest rates are typically beneficial for growth-oriented technology stocks, as they can reduce borrowing costs and increase the present value of future earnings. Adding to the positive sentiment was a 90-day delay in the imposition of higher tariffs on Chinese goods, which reduced trade-related uncertainty for the technology sector.

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:

• Content Delivery company Fastly (NYSE: FSLY) jumped 4.8%. Is now the time to buy Fastly? Access our full analysis report here, it’s free.
• Document Management company DocuSign (NASDAQ: DOCU) jumped 3.5%. Is now the time to buy DocuSign? Access our full analysis report here, it’s free.
• Communications Platform company Twilio (NYSE: TWLO) jumped 7.9%. Is now the time to buy Twilio? Access our full analysis report here, it’s free.
• Project Management Software company Asana (NYSE: ASAN) jumped 6.7%. Is now the time to buy Asana? Access our full analysis report here, it’s free.
• Developer Operations company JFrog (NASDAQ: FROG) jumped 3.1%. Is now the time to buy JFrog? Access our full analysis report here, it’s free.

Zooming In On Twilio (TWLO)

Twilio’s shares are very volatile and have had 22 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.

Twilio is down 6.8% since the beginning of the year, and at $101.68 per share, it is trading 31.5% below its 52-week high of $148.35 from January 2025. Investors who bought $1,000 worth of Twilio’s shares 5 years ago would now be looking at an investment worth $416.74.

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