What Happened?

A number of stocks jumped in the afternoon session after positive news on corporate earnings, easing political and trade tensions, and optimism about future interest rate cuts all converged to lift investor sentiment. 

The overall market, including the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite, climbed significantly. A major catalyst was Apple shares rising 4% after a firm upgraded its rating, citing improving iPhone demand and predicting a long growth cycle. More broadly, the third-quarter earnings season got off to a strong start, with 76% of the 58 S&P 500 companies beating expectations, lifting the market's mood. Additionally, there were hope for an end to the ongoing U.S. government shutdown, which is seen as good for the economy. Investors also moved past recent fears over credit risks that had caused a sell-off the previous week, with shares of regional banks rebounding. Finally, signs that trade tensions with China were de-escalating, including expectations that new tariffs might be avoided, added to the overall positive momentum, leading traders to focus on more favorable factors like earnings and potential Federal Reserve rate cuts.

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:

• Advertising Software company Zeta Global (NYSE: ZETA) jumped 3.6%. Is now the time to buy Zeta Global? Access our full analysis report here, it’s free for active Edge members.
• Sales Software company Salesforce (NYSE: CRM) jumped 4.7%. Is now the time to buy Salesforce? Access our full analysis report here, it’s free for active Edge members.
• Sales Software company HubSpot (NYSE: HUBS) jumped 3.8%. Is now the time to buy HubSpot? Access our full analysis report here, it’s free for active Edge members.
• Finance and Accounting Software company BILL (NYSE: BILL) jumped 2.5%. Is now the time to buy BILL? Access our full analysis report here, it’s free for active Edge members.
• Cloud Monitoring company PagerDuty (NYSE: PD) jumped 2.5%. Is now the time to buy PagerDuty? Access our full analysis report here, it’s free for active Edge members.

Zooming In On Salesforce (CRM)

Salesforce’s shares are not very volatile and have only had 6 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 13 days ago when the stock dropped 3.2% on the news that tech stocks pulled back as a report raised concerns about artificial intelligence demand and profitability. Oracle shares lost more than 5% following news of its cloud business generating lighter margins than expected. According to internal documents cited in the report, the gross profit margin for this business was only 14%, a figure much lower than what analysts had expected. This suggested that the high costs of running the advanced chip infrastructure were weighing on profitability. Compounding these worries was the ongoing U.S. government shutdown, in its second week, with no clear resolution in sight from Washington. These updates drove investors away from riskier assets and towards safe havens, a trend highlighted by gold futures hitting a record $4,000 per ounce for the first time.

Salesforce is down 23.1% since the beginning of the year, and at $254.40 per share, it is trading 30.8% below its 52-week high of $367.87 from December 2024. Investors who bought $1,000 worth of Salesforce’s shares 5 years ago would now be looking at an investment worth $993.87.

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