What Happened?
Shares of edge cloud platform Fastly (NYSE:FSLY) jumped 3.1% in the afternoon session after Federal Reserve Chair Jerome Powell opened the door to possible interest rate cuts. The broader market surged after Federal Reserve Chair Jerome Powell indicated that interest rate cuts could be on the horizon as the labor market shows signs of weakening. This news sparked a significant rally, with the Dow Jones Industrial Average, S&P 500, and the tech-heavy Nasdaq Composite all jumping by approximately 1.5% or more. The positive sentiment was widespread, as the prospect of lower interest rates is generally seen as beneficial for economic growth and corporate profitability. As a technology company, Fastly was carried higher by this strong market-wide momentum.
After the initial pop the shares cooled down to $7.41, up 2.5% from previous close.
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What Is The Market Telling Us
Fastly’s shares are extremely volatile and have had 43 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 8 days ago when the stock dropped 4.1% on the news that a hotter-than-expected wholesale inflation report revived concerns about persistent inflation and tempered hopes for a Federal Reserve interest rate cut. The Producer Price Index (PPI) for July jumped 3.3% from a year earlier, surprising economists who had forecasted a 2.5% rate. This data revived concerns about persistent inflation and forced traders to reconsider the likelihood of a near-term interest rate cut by the Federal Reserve. High-growth technology stocks, which dominate the SaaS landscape, are particularly sensitive to interest rate fluctuations.
Fastly is down 19.5% since the beginning of the year, and at $7.41 per share, it is trading 34.6% below its 52-week high of $11.34 from December 2024. Investors who bought $1,000 worth of Fastly’s shares 5 years ago would now be looking at an investment worth $88.04.
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