What Happened?
A number of stocks jumped in the afternoon session after investors' concerns about US-China trade tensions were eased by President Trump's more conciliatory tone over the weekend.
Following a sharp market drop the previous trading day driven by trade conflict escalation, Wall Street's main indexes opened significantly higher. The Dow Jones Industrial Average, S&P 500, and Nasdaq all saw gains of over 1%. The rebound was attributed to comments made by the President on social media, where he stated the "China situation will all be fine" and that the U.S. "wants to help China, not hurt it!!!" This shift in rhetoric prompted a return to risk assets, as traders brushed aside the previous week's fears. The rally ahead of the upcoming earnings season suggests that the "buy-the-dip" mentality remains strong among investors whenever trade jitters subside.
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:
- Online Marketplace company The RealReal (NASDAQ: REAL) jumped 3.8%. Is now the time to buy The RealReal? Access our full analysis report here, it’s free for active Edge members.
- Consumer Subscription company Chegg (NYSE: CHGG) jumped 2.8%. Is now the time to buy Chegg? Access our full analysis report here, it’s free for active Edge members.
- Online Marketplace company LegalZoom (NASDAQ: LZ) jumped 3.5%. Is now the time to buy LegalZoom? Access our full analysis report here, it’s free for active Edge members.
- Social Networking company Pinterest (NYSE: PINS) jumped 3.9%. Is now the time to buy Pinterest? Access our full analysis report here, it’s free for active Edge members.
- Online Advertising company Alphabet (NASDAQ: GOOGL) jumped 2.8%. Is now the time to buy Alphabet? Access our full analysis report here, it’s free for active Edge members.
Zooming In On Pinterest (PINS)
Pinterest’s shares are quite volatile and have had 17 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 3 days ago when the stock dropped 4.1% after President Trump threatened to impose "massive" new tariffs on Chinese imports, reigniting trade war fears. The unexpected announcement shattered a monthslong calm on Wall Street, sending major indices tumbling. The S&P 500 dropped around 1.3%, while the tech-rich Nasdaq Composite fell 1.7%. Investors reacted by selling off stocks, particularly in the technology and retail sectors, amid concerns that escalating trade tensions could disrupt global supply chains and increase costs for companies. The sell-off marked a significant reversal from the morning's slight gains, highlighting the market's sensitivity to geopolitical trade developments.
Pinterest is up 6% since the beginning of the year, but at $32.42 per share, it is still trading 19% below its 52-week high of $40 from February 2025. Investors who bought $1,000 worth of Pinterest’s shares 5 years ago would now be looking at an investment worth $734.31.
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