What Happened?

A number of stocks fell in the afternoon session after the major indices pulled back (Nasdaq -1.3%, S&P 500 - 1.4%) as Treasury yields rose, reflecting market anxiety over a draft federal budget that could worsen the already wide US fiscal deficit. A poor auction for 20-year U.S. Treasury bonds further raised concerns, as weak demand implies investors are becoming more cautious about holding long-dated U.S. debt.

As a reminder, the driver of a stock's value is the sum of its future cash flows discounted back to today. With lower interest rates (yields), investors can apply higher valuations to their stocks; when yields rise, that math works in reverse.

Adding to the cautious mood were earnings results from retail giants Target and Lowe's, both of which reported weak earnings that missed expectations, pointing to a potential slowdown in consumer spending and further weighing on sentiment.

Lastly, some influential voices such as Jamie Dimon (JPMorgan) and Steve Cohen (Point72) have made cautious comments about market, which can sometimes become self-fulfilling prophecies as investors increase their cautiousness and skittishness.

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:

Home Construction Materials company Fortune Brands (NYSE:FBIN) fell 5.4%. Is now the time to buy Fortune Brands? Access our full analysis report here, it’s free. Electrical Systems company Whirlpool (NYSE:WHR) fell 5.5%. Is now the time to buy Whirlpool? Access our full analysis report here, it’s free. Dental Equipment & Technology company Align Technology (NASDAQ:ALGN) fell 5.4%. Is now the time to buy Align Technology? Access our full analysis report here, it’s free. Healthcare Technology for Patients company Tandem Diabetes (NASDAQ:TNDM) fell 8.2%. Is now the time to buy Tandem Diabetes? Access our full analysis report here, it’s free. Medical Devices & Supplies - Specialty company STAAR Surgical (NASDAQ:STAA) fell 5.4%. Is now the time to buy STAAR Surgical? Access our full analysis report here, it’s free.

Zooming In On Tandem Diabetes (TNDM)

Tandem Diabetes’s shares are extremely volatile and have had 31 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.

Tandem Diabetes is down 39.5% since the beginning of the year, and at $21.70 per share, it is trading 59.4% below its 52-week high of $53.43 from May 2024. Investors who bought $1,000 worth of Tandem Diabetes’s shares 5 years ago would now be looking at an investment worth $247.63.

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