What Happened?

A number of stocks jumped in the afternoon session after the Bureau of Economic Analysis reported a 0.9% increase in personal consumption expenditures for August, signaling resilient consumer demand alongside steady economic expansion. 

The latest report from the U.S. Bureau of Economic Analysis showed that consumer outlays advanced strongly despite a modest 0.2% uptick in personal income. Underlying inflation trends also remained relatively subdued, with the core Personal Consumption Expenditures price index—a key inflation gauge watched closely by policymakers—increasing 0.2% month-over-month. Supporting the positive economic picture, the third estimate of second-quarter gross domestic product confirmed the economy expanded at an annualized rate of 2.2%. 

Together, these indicators suggest that households continue to spend at a healthy pace, alleviating concerns over an impending consumer slowdown and bolstering market confidence across retail and consumer sectors.

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:

• Project Management Software company Asana (NYSE: ASAN) jumped 4.4%. Is now the time to buy Asana? Access our full analysis report here, it’s free.
• Design Software company Unity (NYSE: U) jumped 4.3%. Is now the time to buy Unity? Access our full analysis report here, it’s free.
• Data Infrastructure company C3.ai (NYSE: AI) jumped 4.8%. Is now the time to buy C3.ai? Access our full analysis report here, it’s free.
• Vulnerability Management company Rapid7 (NASDAQ: RPD) jumped 6.3%. Is now the time to buy Rapid7? Access our full analysis report here, it’s free.
• Sales Software company ZoomInfo (NASDAQ: GTM) jumped 4.3%. Is now the time to buy ZoomInfo? Access our full analysis report here, it’s free.

Zooming In On Rapid7 (RPD)

Rapid7’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 5 days ago when the stock dropped 5.7% on the news that elevated valuation multiples led investors and analysts to question whether the sector's sharp artificial intelligence-fueled gains can last. Cybersecurity shares had rallied strongly on expectations that the spread of artificial intelligence (AI) would drive demand for tools that protect companies' networks, data and cloud systems. That enthusiasm pushed prices up faster than the companies' underlying earnings and sales, according to the Financial Post. A valuation multiple compares a company's share price to a financial measure such as revenue or profit. The price-to-sales ratio is one example. When these multiples climb well above historical norms, investors are paying more for each dollar of a company's current business, betting that future growth will justify the premium. High multiples also leave less room for error. Any sign that growth may slow, or simply a shift in market mood, can trigger sharp pullbacks as investors lock in profits. That appears to be what is happening now. 

Rather than reacting to a specific piece of bad company news, the sector is moving lower as a group because investors are reassessing how much they are willing to pay for AI-linked growth. Because many cybersecurity firms trade on similar expectations, doubts about the sector's staying power tend to hit these stocks together. The long-term case for cybersecurity spending remains tied to AI adoption. 

In the near term, however, the retreat shows that stretched valuations can make even fast-growing sectors vulnerable to swings in investor sentiment.

Rapid7 is down 12.4% since the beginning of the year, and at $12.50 per share, it is trading 35.4% below its 52-week high of $19.35 from October 2025. Investors who bought $1,000 worth of Rapid7’s shares 5 years ago would now be looking at only $110.59.

WHILE YOU’RE HERE: The Next Palantir? One satellite company captures images of every point on Earth. Every single day. The Pentagon wants it. Hedge funds are using it to beat earnings. You’ve probably never heard of it.

This is what the early days of Palantir looked like before it became a giant. Same playbook. Different technology. If you missed Palantir, you need to see this. Claim The Stock Ticker for Free HERE.