What Happened?
A number of stocks fell in the afternoon session after the CPI print of 4.2% annual inflation (the hottest since 2023) revived the rate hike narrative.
Markets began to fully price a December Fed rate hike, and semiconductor stocks, which price on earnings years out, reprice faster than most sectors when discount rates move. The SpaceX IPO added secondary pressure: the company closed investor orders ahead of its debut at a $1.77 trillion valuation, and MSC identified chip names among the holdings facing the largest forced outflows as investors reallocate to fund the listing. Trump's mid-session Iran escalation, pledging to "attack very hard", drove the Dow to session lows, sealing the risk-off tone.
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:
- Processors and Graphics Chips company Allegro MicroSystems (NASDAQ: ALGM) fell 4.7%. Is now the time to buy Allegro MicroSystems? Access our full analysis report here, it’s free.
- Analog Semiconductors company Sensata Technologies (NYSE: ST) fell 5%. Is now the time to buy Sensata Technologies? Access our full analysis report here, it’s free.
Zooming In On Sensata Technologies (ST)
Sensata Technologies’s shares are quite volatile and have had 19 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 22 days ago when the stock dropped 3.2% as a broader selloff hit the semiconductor sector amid valuation concerns and investor nervousness ahead of Nvidia's earnings report.
The decline was part of an industry-wide trend where investors retreat from richly valued chip stocks. These stocks were a primary force behind the U.S. market's climb to record highs. Earnings from Nvidia, a key player in the artificial intelligence space, were viewed as a significant test for the AI boom narrative that powered the market. This uncertainty contributed to the negative sentiment across the semiconductor space, leading to a slide in major chipmakers.
Sensata Technologies is up 34.9% since the beginning of the year, but at $47.07 per share, it is still trading 12.1% below its 52-week high of $53.55 from June 2026. Despite the year-to-date gain, investors who bought $1,000 worth of Sensata Technologies’s shares 5 years ago would now be looking at only $786.60.
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