Inflation data drives gains on US stock markets

The release of the Personal Consumption Expenditures (PCE) Price Index, which serves as the US Federal Reserve's preferred measure for assessing inflation, aligned with forecasts in August. These developments were met with relief on Wall Street, as they indicate that inflationary pressures remain under control and continue to provide the Federal Reserve with room for interest rate cuts. Consequently, investors interpreted the data as a positive indicator that the Fed can support the economy without risking significantly rising inflation. This optimistic sentiment helped major indices partially recover losses from the previous three days, leading to gains in various sectors. The stock market is known for its tendency to overreact to news, which is why dramatic price losses can offer good opportunities to acquire high-quality stocks at attractive prices. In the afternoon phase of trading, this context led to significant price movements in a number of individual stocks. One example is AAR, whose shares are moving in a volatile price environment, having fluctuated more than 5% ten times in the past twelve months. The current price increase underscores the relevance of recent economic news without fundamentally changing the market's basic opinion about the company. Just two days ago, AAR's stock price rose 3.3% after the announcement of third-quarter 2025 results exceeded analysts’ expectations in both revenue and earnings. AAR reported revenue of $739.6 million, representing an 11.8% increase compared to the previous year and comfortably surpassing the consensus forecast of $688.8 million. Adjusted earnings per share also exceeded the analysts’ forecast of $0.98, coming in at $1.08, and showed an increase compared to $0.85 in the prior-year quarter. Additionally, AAR improved its profitability, with the operating margin increasing from 6.6% to 8.8%. Due to these impressive results, which demonstrated solid growth and increased efficiency, investors were pleased. Since the beginning of the year, AAR's stock has risen by 39.1% and is trading at $85.66 per share, a new 52-week high. Investors who invested $1,000 in AAR five years ago now face an investment value of $4,313. Given the growing importance of generative AI for large companies, Nvidia and AMD are valued at all-time highs. Nevertheless, investment recommendations also target lesser-known but profitable semiconductor companies benefiting from this development.