Radek Strnad
3 min read
What Happened?
A number of stocks fell in the afternoon session after a broad pickup in energy expenses lifted September inflation to 3.7%, surpassing expectations and driving bond yields higher.
The hotter-than-anticipated inflation reading dampened market sentiment across Wall Street, weighing heavily on major benchmark indexes and pulling equities down from recent highs. When inflation accelerates, it often increases expectations that borrowing costs will remain elevated for an extended period to curb economic overheating. Elevated interest rates can compress corporate valuations, particularly across growth sectors such as technology and semiconductors, where future earnings expectations play a central role in pricing.
Semiconductor shares faced extended pressure, marking their seventh consecutive session of declines as market participants recalibrated risk appetites. Beyond higher financing expenses, persistent energy-driven inflation risks squeezing operating margins and weakening broader enterprise spending. Investors are continuing to evaluate whether persistent price pressures will lead to tighter financial conditions and prolonged headwinds for capital-intensive industries.
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:
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Safety & Security Services company GEO Group(NYSE:GEO) fell 3.2%.Is now the time to buy GEO Group? Access our full analysis report here, it’s free.
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Hardware & Infrastructure company Xerox(NASDAQ:XRX) fell 4.6%.Is now the time to buy Xerox? Access our full analysis report here, it’s free.
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Electronic Components & Manufacturing company Jabil(NYSE:JBL) fell 7.1%.Is now the time to buy Jabil? Access our full analysis report here, it’s free.
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Electronic Components & Manufacturing company Coherent(NYSE:COHR) fell 7.6%.Is now the time to buy Coherent? Access our full analysis report here, it’s free.
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Electronic Components & Manufacturing company TTM Technologies(NASDAQ:TTMI) fell 6.8%.Is now the time to buy TTM Technologies? Access our full analysis report here, it’s free.
Zooming In On Coherent (COHR)
Coherent’s shares are extremely volatile and have had 86 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 13 days ago when the stock gained 10.5% on the news that Bernstein rated the company Outperform with a $350 price target, pointing to optical-module upside as data-center switches move to higher speeds. According to Streetinsider, the firm framed $350 as about 24% upside, valuing the stock at 22× estimated 2028 EPS of $16, and argued optical-module demand should keep expanding with faster networking gear. Bullish AI-infrastructure read-across was reinforced by Citi commentary tagging Coherent as an AI hardware beneficiary, plus investor focus on Coherent’s PhotonLink optics platform and AI security demo amid a broader bid in networking names.
