What Happened?

Shares of aI-powered lending platform Upstart (NASDAQ:UPST) jumped 7.5% in the afternoon session as markets experienced a boost after data from the Bureau of Labor Statistics revealed that inflation for the month of February 2025 came in better than expected. The CPI rose 0.2% from the previous month (vs estimates for a 0.3% increase), while headline inflation rose 2.8% year on year (vs estimates for a 2.9% y/y increase). The data revealed inflation continued to edge closer to the Fed's 2% target, but not quite there yet. The reaction wasn't anything wild, but the sentiment leaned positive. The Nasdaq led the way, climbing 1.4%, boosting some tech stocks.

The shares closed the day at $49.62, up 6.3% from previous close.

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What The Market Is Telling Us

Upstart’s shares are extremely volatile and have had 69 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 15 days ago when the stock dropped 8.5% after the Nasdaq dropped 1.3%, marking its fourth consecutive day of losses, as concerns over the tech sector continued to mount. The downturn appeared to be most pronounced in stocks heavily exposed to the AI market, with traders growing uneasy about stretched valuations and potential slowdowns in AI-related spending.

Adding to the pressure, a lack of positive economic data fueled broader uncertainty about the U.S. economy, particularly regarding consumer confidence and corporate investment trends.

Separately, the trade debates returned after President Trump announced that the tariffs on Canada and Mexico will "go forward" when the temporary suspension expired. This sparked fresh worries about supply chain issues and rising costs for companies that depend on cross-border trade, leading analysts to rethink the economic impact on affected industries.

Upstart is down 18.7% since the beginning of the year, and at $49.41 per share, it is trading 44.3% below its 52-week high of $88.77 from February 2025. Investors who bought $1,000 worth of Upstart’s shares at the IPO in December 2020 would now be looking at an investment worth $1,677.

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