What Happened?
A number of stocks jumped in the afternoon session after a new trade agreement between the United States and Japan spurred a broad market rally.
The positive sentiment swept across markets after it was announced the U.S. and Japan had reached a new trade deal. The agreement included a 15% tariff on Japanese goods imported into the U.S. and a commitment from Japan to invest $550 billion in the U.S. and open its markets to American cars and agricultural products. This development boosted investor confidence and contributed to a widespread rally, lifting stocks across many sectors. The Dow Jones Industrial Average and the S&P 500 both posted gains, creating a favorable environment that likely benefited individual stocks.
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:
- Health Insurance Providers company Elevance Health (NYSE: ELV) jumped 4.5%. Is now the time to buy Elevance Health? Access our full analysis report here, it’s free.
- Traditional Media & Publishing company EchoStar (NASDAQ: SATS) jumped 4.3%. Is now the time to buy EchoStar? Access our full analysis report here, it’s free.
- General Industrial Machinery company Icahn Enterprises (NASDAQ: IEP) jumped 4.5%. Is now the time to buy Icahn Enterprises? Access our full analysis report here, it’s free.
- Healthcare Technology for Providers company Evolent Health (NYSE: EVH) jumped 4.8%. Is now the time to buy Evolent Health? Access our full analysis report here, it’s free.
- Advertising Software company The Trade Desk (NASDAQ: TTD) jumped 3.8%. Is now the time to buy The Trade Desk? Access our full analysis report here, it’s free.
Zooming In On Evolent Health (EVH)
Evolent Health’s shares are extremely volatile and have had 39 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 17.4% as several negative developments weighed on the sector. Weakness in managed care providers was a significant factor, with companies like Elevance Health and Humana seeing declines due to an analyst downgrade and a lost lawsuit regarding Medicare bonus payments, respectively.
Additionally, some pharmaceutical and biotech companies experienced sharp drops following unfavorable news; for instance, Sarepta Therapeutics plunged after a report indicated another patient death tied to its experimental gene therapy, and GSK's blood cancer drug dosage was voted against by the FDA advisory committee. Broader market sentiment, including concerns about rising costs and inadequate pricing for 2025 plans among health insurers, also contributed to the downward pressure on healthcare equities.
Evolent Health is down 10.5% since the beginning of the year, and at $10.28 per share, it is trading 68.8% below its 52-week high of $32.97 from August 2024. Investors who bought $1,000 worth of Evolent Health’s shares 5 years ago would now be looking at an investment worth $979.98.
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