What Happened?
Shares of natural food company Hain Celestial (NASDAQ: HAIN) jumped 5.7% in the afternoon session after the release of a cooler-than-expected Producer Price Index (PPI) report, fanned investor hopes for an interest rate cut by the Federal Reserve.
The U.S. Bureau of Labor Statistics reported that the PPI, a key measure of wholesale inflation, unexpectedly declined by 0.1% in August. This contrasted sharply with economists' forecasts of a 0.3% rise and followed a revised 0.7% increase in July. This sign of easing inflation, combined with other recent data pointing to a weakening U.S. labor market, has convinced many investors that the central bank will lower borrowing costs. The Federal Reserve, which closely monitors inflation and employment data, is now widely expected to implement a rate cut at its meeting next week to help stimulate the economy.
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What Is The Market Telling Us
Hain Celestial’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 19 days ago when the stock gained 8.5% on the news that Federal Reserve Chair Jerome Powell signaled that potential interest rate cuts could be on the horizon, fueling a broad market rally. Powell's comments on Friday indicated that a slowing job market "may warrant" interest rate cuts in the future. This dovish signal from the central bank sparked a significant rally across the broader market, as the prospect of lower borrowing costs boosted investor sentiment. All three major U.S. stock indexes climbed more than 1.6%, with the S&P 500 gaining 1.7%. The market-wide upswing lifted most stocks, including Hain Celestial, as part of the positive reaction to the potential for a less restrictive monetary policy.
Hain Celestial is down 66.1% since the beginning of the year, and at $2.04 per share, it is trading 77.6% below its 52-week high of $9.09 from October 2024. Investors who bought $1,000 worth of Hain Celestial’s shares 5 years ago would now be looking at an investment worth $62.35.
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