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:

• IT Services & Consulting company EPAM (NYSE: EPAM) jumped 4%. Is now the time to buy EPAM? Access our full analysis report here, it’s free.
• Professional Staffing & HR Solutions company First Advantage (NASDAQ: FA) jumped 4.2%. Is now the time to buy First Advantage? Access our full analysis report here, it’s free.
• IT Services & Consulting company Gartner (NYSE: IT) jumped 4.8%. Is now the time to buy Gartner? Access our full analysis report here, it’s free.
• IT Distribution & Solutions company Insight Enterprises (NASDAQ: NSIT) jumped 4%. Is now the time to buy Insight Enterprises? Access our full analysis report here, it’s free.
• Professional Staffing & HR Solutions company Insperity (NYSE: NSP) jumped 3.3%. Is now the time to buy Insperity? Access our full analysis report here, it’s free.

Zooming In On Gartner (IT)

Gartner’s shares are not very volatile and have only had 5 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.

The previous big move we wrote about was 8 days ago when the stock dropped 27.3% on the news that the company lowered its full-year revenue forecast, which overshadowed a better-than-expected second-quarter earnings report. The company trimmed its full-year revenue projection to at least $6.45 billion, down from a previous forecast of around $6.54 billion. This revised outlook fell short of analyst expectations. While Gartner's second-quarter revenue of $1.69 billion and adjusted earnings per share of $3.53 both beat estimates, investors focused on the disappointing guidance for the remainder of the year. The firm also guided its full-year adjusted profit to $11.75 per share, which was below the market's consensus estimate.

Gartner is down 49.8% since the beginning of the year, and at $242.65 per share, it is trading 56% below its 52-week high of $551.80 from November 2024. Investors who bought $1,000 worth of Gartner’s shares 5 years ago would now be looking at an investment worth $1,850.

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