What Happened?
A number of stocks jumped in the afternoon session after the latest Consumer Price Index (CPI) report showed inflation cooling more than anticipated, fueling optimism for potential Federal Reserve interest rate cuts.
The November report indicated that annual inflation fell to 2.7%, significantly below economists' expectations of 3.1% and its lowest level since July. The Consumer Price Index, or CPI, is a key measure of inflation. This encouraging data was welcomed by investors, as sustained lower inflation could give the U.S. Federal Reserve more justification to lower interest rates in the coming year.
Wall Street favors lower interest rates because they reduce borrowing costs for companies and can stimulate economic activity, making stocks more attractive. The positive news helped major indexes, including the S&P 500 and the tech-heavy Nasdaq, snap a four-day losing streak.
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:
- Gig Economy company DoorDash (NASDAQ: DASH) jumped 4.9%. Is now the time to buy DoorDash? Access our full analysis report here, it’s free for active Edge members.
- Video Gaming company Skillz (NYSE: SKLZ) jumped 2.6%. Is now the time to buy Skillz? Access our full analysis report here, it’s free for active Edge members.
- Online Marketplace company MercadoLibre (NASDAQ: MELI) jumped 2.7%. Is now the time to buy MercadoLibre? Access our full analysis report here, it’s free for active Edge members.
- Social Networking company Reddit (NYSE: RDDT) jumped 3.4%. Is now the time to buy Reddit? Access our full analysis report here, it’s free for active Edge members.
Zooming In On DoorDash (DASH)
DoorDash’s shares are quite volatile and have had 16 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 17 days ago when the stock gained 4.3% on the news that a director at the company and partner at a major investor, Sequoia Capital, purchased approximately $100 million worth of its shares.
Alfred Lin, a managing partner at Sequoia, acquired roughly 514,000 shares over several transactions, according to a regulatory filing. Such a large investment by an insider, particularly one representing the company's second-largest investor, often signals strong belief in the company's future prospects. The significant purchase appeared to have boosted investor confidence, leading to a rebound for the stock, which had fallen more than 22% in the previous month.
DoorDash is up 36% since the beginning of the year, but at $232.06 per share, it is still trading 17.6% below its 52-week high of $281.74 from October 2025. Investors who bought $1,000 worth of DoorDash’s shares 5 years ago would now be looking at an investment worth $1,395.
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