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:
- Automation software company SoundHound AI (NASDAQ: SOUN) fell 6.5%. Is now the time to buy SoundHound AI? Access our full analysis report here, it’s free.
- Data analytics company Health Catalyst (NASDAQ: HCAT) fell 7.2%. Is now the time to buy Health Catalyst? Access our full analysis report here, it’s free.
- Hospitality & restaurant software company Toast (NYSE: TOST) fell 2.9%. Is now the time to buy Toast? Access our full analysis report here, it’s free.
Zooming in on Health Catalyst (HCAT)
Health Catalyst’s shares are extremely volatile and have had 56 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 biggest move we wrote about over the last year was 3 months ago when the stock dropped 23.1% on the news that the company provided a weak third-quarter revenue forecast and lowered its full-year outlook, despite topping second-quarter revenue expectations.
For the upcoming third quarter, Health Catalyst expects revenue of $55.5 million, a sharp sequential decline from the $70.49 million reported for the second quarter, which itself was down 12.7% year over year. The company also reduced its full-year 2026 revenue guidance to $247.5 million at the midpoint, a 5.7% decrease from its previous forecast. This bleak outlook overshadowed the second-quarter results, in which the company's adjusted earnings per share met analysts' estimates, signaling significant challenges ahead.
Health Catalyst is down 38.8% since the beginning of the year, and at $1.40 per share, it is trading 53.3% below its 52-week high of $2.99 from November 2025. Investors who bought $1,000 worth of Health Catalyst’s shares 5 years ago would now be looking at only $28.67.
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