What happened?
A number of stocks fell in the morning session after hotter-than-expected October consumer inflation and hawkish Federal Reserve commentary reignited interest rate worries.
The pullback followed the October consumer price index report released by the Bureau of Labor Statistics, where headline inflation rose 0.4% month over month, exceeding the 0.3% increase projected by economists polled by Dow Jones, as reported by CNBC. Further pressuring sentiment, Federal Reserve Governor Christopher Waller stated in a speech carried by CNBC that a December rate hike is likely, adding that policymakers should consider a 50-basis-point increase if price pressures persist to protect central bank credibility.
This interrupted a strong rebound from the previous session, when the S&P 500 rose 2.4% and the Nasdaq Composite climbed 2.7%, according to CNBC. The pullback was more pronounced in growth-oriented technology stocks as higher rate projections disproportionately affect long-duration cash flows.
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:
- Sales software company ZoomInfo (NASDAQ: GTM) fell 3.5%. Is now the time to buy ZoomInfo? Access our full analysis report here, it’s free.
- Sales software company HubSpot (NYSE: HUBS) fell 3.1%. Is now the time to buy HubSpot? Access our full analysis report here, it’s free.
- Data analytics company Amplitude (NASDAQ: AMPL) fell 3.8%. Is now the time to buy Amplitude? Access our full analysis report here, it’s free.
- Project management software company Asana (NYSE: ASAN) fell 3.3%. Is now the time to buy Asana? Access our full analysis report here, it’s free.
- Vertical software company Guidewire Software (NYSE: GWRE) fell 4.2%. Is now the time to buy Guidewire Software? Access our full analysis report here, it’s free.
Zooming in on Guidewire Software (GWRE)
Guidewire Software’s shares are extremely volatile and have had 49 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 gained 5.4% on the news that software stocks extended gains as the broader stock market undergoes an overhaul regarding the future of the artificial intelligence trade.
Repricing continued to unfold following the previous week’s sharp retreat in tech equities, when mounting financing hurdles weakened demand for physical artificial intelligence builders. As reported by CNBC, high-growth software stocks are looking increasingly attractive as market participants rotate money out of the semiconductor sector and into the parts of the AI trade that they believe will outperform going forward. CNBC noted that this rotation is being driven by growing investor weariness that the broader market will face a challenging environment next year due to a ballooning U.S. fiscal deficit, higher inflation, and an anticipated deceleration in the massive AI infrastructure capital expenditure cycle.
Furthermore, CNBC explained that the earlier narrative surrounding "software obsolescence"—where investors feared AI agents could replace traditional software packages—has largely receded as strong earnings expectations and new AI product partnerships revive confidence in the sector. Ultimately, CNBC observed that this shift in sentiment has created a pronounced divergence in the market, with software sector ETFs climbing sharply in recent months while semiconductor ETFs suffer extended, historic losing streaks.
Guidewire Software is down 17.5% since the beginning of the year, and at $154.74 per share, it is trading 30.5% below its 52-week high of $222.51 from November 2025. Despite the year-to-date decline, investors who bought $1,000 worth of Guidewire Software’s shares 5 years ago would now be looking at an investment worth $1,238.
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