What Happened?
A number of stocks fell in the afternoon session after September consumer price inflation accelerated to 3.7% and core inflation topped estimates, reigniting concerns over Federal Reserve interest rate hikes.
The hotter-than-expected data showed headline consumer prices rising 3.7% annually, while core inflation, which excludes volatile food and energy prices, reached 2.6%. In the wake of the report, traders raised the implied probability of a central bank rate increase at the next meeting to nearly 44%. The sudden shift in policy expectations pushed Treasury yields higher and triggered volatility across bond markets.
Banking leaders pointed out that persistent interest rate uncertainty and Treasury market swings are dampening client trading activity and stalling corporate dealmaking as reported by TheStreet. When borrowing costs remain high and unpredictable, corporations typically hold off on mergers, acquisitions, and debt offerings, creating broad sector-wide pressure on investment banking revenue.
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:
- Personal Loan company Nubank (NYSE: NU) fell 3.4%. Is now the time to buy Nubank? Access our full analysis report here, it’s free.
- Asset Management company Carlyle (NASDAQ: CG) fell 3.4%. Is now the time to buy Carlyle? Access our full analysis report here, it’s free.
- Asset Management company StepStone Group (NASDAQ: STEP) fell 3.9%. Is now the time to buy StepStone Group? Access our full analysis report here, it’s free.
- Asset Management company Cohen & Steers (NYSE: CNS) fell 3.5%. Is now the time to buy Cohen & Steers? Access our full analysis report here, it’s free.
- Investment Banking & Brokerage company Houlihan Lokey (NYSE: HLI) fell 3.7%. Is now the time to buy Houlihan Lokey? Access our full analysis report here, it’s free.
Zooming In On StepStone Group (STEP)
StepStone Group’s shares are very volatile and have had 23 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 20 days ago when the stock dropped 3.5% on the news that investors kept pricing in higher borrowing costs from the Federal Reserve’s recent rate hike and the lasting pressure that tighter policy puts on private-market dealmaking and exits. According to Morningstar, elevated policy rates create headwinds for private equity firms by lifting floating-rate interest expense and worsening exit bottlenecks. More expensive leverage can slow deal activity and make portfolio-company sales harder to complete at attractive prices, reducing distributions back to limited partners. That hangover from the Fed’s tightening move continues to weigh on publicly traded PE managers and related capital-markets names as the market reassesses how durable higher funding costs will be for leveraged deal flow.
StepStone Group is down 39.4% since the beginning of the year, and at $40.36 per share, it is trading 47.1% below its 52-week high of $76.27 from January 2026. Investors who bought $1,000 worth of StepStone Group’s shares 5 years ago would now be looking at only $937.83.
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