What Happened?

A number of stocks fell in the afternoon session after markets pulled back as hotter-than-expected wholesale inflation data was released, raising concerns about the future path of interest rates. The U.S. Labor Department reported that the Producer Price Index (PPI), which measures inflation at the wholesale level, jumped 3.3% year-over-year in July, significantly above economists' forecasts of 2.5%. This unexpected increase suggests that cost pressures are building for businesses, which could eventually be passed on to consumers. The hotter-than-expected data prompted investors to scale back bets on an imminent interest rate cut by the Federal Reserve. Higher interest rates can dampen economic activity and negatively affect the valuations of growth-oriented stocks, such as those in the internet sector, leading to a broad market retreat.

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:

• Financial Technology company Coinbase (NASDAQ: COIN) fell 3.1%. Is now the time to buy Coinbase? Access our full analysis report here, it’s free.
• Online Marketplace company eHealth (NASDAQ: EHTH) fell 3.8%. Is now the time to buy eHealth? Access our full analysis report here, it’s free.
• Online Marketplace company Etsy (NASDAQ: ETSY) fell 3%. Is now the time to buy Etsy? Access our full analysis report here, it’s free.
• Consumer Subscription company Udemy (NASDAQ: UDMY) fell 3.1%. Is now the time to buy Udemy? Access our full analysis report here, it’s free.
• Online Marketplace company Cars.com (NYSE: CARS) fell 3.7%. Is now the time to buy Cars.com? Access our full analysis report here, it’s free.

Zooming In On eHealth (EHTH)

eHealth’s shares are extremely volatile and have had 52 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 1 day ago when the stock gained 4.3% on the news that markets continued to rally as the latest inflation data reinforced expectations for a Federal Reserve rate cut as soon as September. The latest Consumer Price Index (CPI) report for July showed inflation holding steady, reinforcing market expectations that the Federal Reserve could begin cutting interest rates as soon as September. Lower interest rates generally stimulate the economy by making borrowing cheaper for consumers and businesses. This can lead to increased consumer spending and e-commerce activity, which directly benefits online retail and marketplace companies. The positive economic outlook fueled a broad-based rally, pushing the S&P 500 and Nasdaq to new record highs and lifting most growth-oriented technology stocks.

eHealth is down 60.9% since the beginning of the year, and at $3.49 per share, it is trading 68.7% below its 52-week high of $11.14 from February 2025. Investors who bought $1,000 worth of eHealth’s shares 5 years ago would now be looking at an investment worth $46.98.

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