What Happened?
A number of stocks jumped in the afternoon session after the United States and Iran agreed to halt their tit-for-tat military exchanges, easing fears of a wider Middle East conflict that had rattled markets over the weekend.
The relief lifted the whole risk complex. The pre-existing trigger was the chip-to-software rotation, sparked by a June 25 report that OpenAI may delay its IPO, which softened the "SaaSpocalypse" fear that AI labs would quickly cannibalize incumbent SaaS. The Iran news matters for software through the rate channel. Lower oil eases the inflation impulse that had pushed traders to price in a Fed rate hike later in the year, and falling rate-hike odds disproportionately help long-duration, high-multiple growth software exactly the cohort hit hardest in 2026. So, the de-escalation removed a macro overhang, at the same moment the micro narrative (OpenAI's constraints) reduced the existential AI-disruption fear.
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:
- Data Infrastructure company Elastic (NYSE: ESTC) jumped 2.6%. Is now the time to buy Elastic? Access our full analysis report here, it’s free.
- Hospitality & Restaurant Software company Toast (NYSE: TOST) jumped 3.7%. Is now the time to buy Toast? Access our full analysis report here, it’s free.
- Cloud Monitoring company Nutanix (NASDAQ: NTNX) jumped 3.6%. Is now the time to buy Nutanix? Access our full analysis report here, it’s free.
Zooming In On Toast (TOST)
Toast’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 5 days ago when the stock gained 6.7% on the news that S&P Dow Jones Indices announced the company will be added to the S&P MidCap 400 index.
The change was scheduled to become effective prior to the opening of trading on Wednesday, July 1. Toast was set to replace TopBuild Corp. in the index. Inclusion in a major market index often leads to increased demand for a company's stock, as investment funds that track the index must purchase shares to reflect the new composition. This anticipated buying can put upward pressure on the stock price.
Toast is down 17.5% since the beginning of the year, and at $28.04 per share, it is trading 43.1% below its 52-week high of $49.30 from August 2025. Investors who bought $1,000 worth of Toast’s shares at the IPO in September 2021 would now be looking at an investment worth $448.90.
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