What Happened?

A number of stocks fell in the afternoon session after the release of a stronger-than-anticipated Producer Price Index (PPI) report showed wholesale inflation rose more than expected in January. 

The U.S. Bureau of Labor Statistics reported that the PPI, a key measure of inflation at the wholesale level, increased by 0.5% last month, significantly above the 0.3% consensus forecast from economists. On a year-over-year basis, the index rose 2.9%. This unexpectedly high reading suggests that inflationary pressures in the supply chain are more persistent than previously thought. The data has dampened investor optimism for near-term interest rate cuts from the Federal Reserve, as the central bank is less likely to lower borrowing costs while inflation remains elevated. This shift in expectations for monetary policy triggered a broad sell-off across the market, as traders adjusted to the possibility of interest rates remaining higher for longer.

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:

• Specialty Finance company Hercules Capital (NYSE: HTGC) fell 8%. Is now the time to buy Hercules Capital? Access our full analysis report here, it’s free.
• Student Loan company Sallie Mae (NASDAQ: SLM) fell 11.3%. Is now the time to buy Sallie Mae? Access our full analysis report here, it’s free.

Zooming In On Sallie Mae (SLM)

Sallie Mae’s shares are not very volatile and have only had 8 moves greater than 5% over the last year. Moves this big are rare for Sallie Mae and indicate this news significantly impacted the market’s perception of the business.

The biggest move we wrote about over the last year was 3 months ago when the stock dropped 16.4% on the news that multiple analysts downgraded the stock, citing concerns about a higher expense outlook. Morgan Stanley lowered its rating on the student loan company from 'Overweight' to 'Equalweight' and cut its price target. The change came after Sallie Mae presented a scenario that showed potentially higher-than-expected expenses in 2026 and 2027 as it prepared for new loan opportunities and potential government changes. Due to this outlook, Morgan Stanley reduced its earnings per share estimates for those years. Adding to the pressure, Compass Point also downgraded the stock more severely, from 'Buy' to 'Sell,' and significantly lowered its price target from $35.00 to $23.00.

Sallie Mae is down 30.3% since the beginning of the year, and at $19.10 per share, it is trading 44.5% below its 52-week high of $34.40 from July 2025. Investors who bought $1,000 worth of Sallie Mae’s shares 5 years ago would now be looking at an investment worth $1,199.

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