What Happened?
A number of stocks jumped in the afternoon session after markets continued to rally as investor optimism grew for a potential Federal Reserve interest rate cut in September. This optimism was largely fueled by a recent consumer price index report that showed inflation easing, along with public comments from Treasury Secretary Scott Bessent advocating for a significant 50-basis-point rate cut. The prospect of lower borrowing costs tends to boost rate-sensitive sectors like Business Services, as it can encourage companies to increase spending on consulting, IT projects, and staffing.
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:
- Industrial & Environmental Services company Driven Brands (NASDAQ: DRVN) jumped 3.1%. Is now the time to buy Driven Brands? Access our full analysis report here, it’s free.
- Advertising & Marketing Services company Interpublic Group (NYSE: IPG) jumped 3.1%. Is now the time to buy Interpublic Group? Access our full analysis report here, it’s free.
- Professional Staffing & HR Solutions company Korn Ferry (NYSE: KFY) jumped 3%. Is now the time to buy Korn Ferry? Access our full analysis report here, it’s free.
Zooming In On Interpublic Group (IPG)
Interpublic Group’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 28 days ago when the stock gained 3.3% on the news that its pending acquisition by advertising rival Omnicom Group received a positive update.
On its second-quarter earnings call, Omnicom's management confirmed that the acquisition of Interpublic Group (IPG) had received antitrust approval in the United States, a major step forward for the deal. In total, 13 of the 18 necessary jurisdictions have now approved the transaction, which is expected to be finalized in the second half of 2025. This mega-merger is set to combine two of the world's largest advertising and marketing services companies, creating a new industry leader. The update reduces uncertainty surrounding the deal's closure, a positive development for IPG shareholders.
Interpublic Group is down 6.9% since the beginning of the year, and at $26.20 per share, it is trading 19.7% below its 52-week high of $32.61 from August 2024. Investors who bought $1,000 worth of Interpublic Group’s shares 5 years ago would now be looking at an investment worth $1,394.
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