What Happened?
A number of stocks jumped in the afternoon session after the major indices rebounded, as Fed Chair Jerome Powell delivered dovish remarks at the much-awaited Jackson Hole symposium. Powell suggested that with inflation risks moderating and unemployment remaining low, the Federal Reserve might consider a shift in its monetary policy stance, including potential interest rate cuts. This outlook eased market concerns about prolonged high interest rates and their impact on economic growth. The prospect of lower borrowing costs bolstered investor confidence, particularly in sectors that have lagged, leading to a broad rally across the market.
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:
- Real Estate Services company Opendoor (NASDAQ: OPEN) jumped 29.2%. Is now the time to buy Opendoor? Access our full analysis report here, it’s free.
- Thrifts & Mortgage Finance company Mr. Cooper Group (NASDAQ: COOP) jumped 8%. Is now the time to buy Mr. Cooper Group? Access our full analysis report here, it’s free.
- Thrifts & Mortgage Finance company Flagstar Financial (NYSE: FLG) jumped 5.2%. Is now the time to buy Flagstar Financial? Access our full analysis report here, it’s free.
- Thrifts & Mortgage Finance company Columbia Financial (NASDAQ: CLBK) jumped 4.5%. Is now the time to buy Columbia Financial? Access our full analysis report here, it’s free.
- Thrifts & Mortgage Finance company Arbor Realty Trust (NYSE: ABR) jumped 4.4%. Is now the time to buy Arbor Realty Trust? Access our full analysis report here, it’s free.
Zooming In On Opendoor (OPEN)
Opendoor’s shares are extremely volatile and have had 90 moves greater than 5% over the last year. But moves this big are rare even for Opendoor and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 2 days ago when the stock dropped 8.5% on the news that the major indices continued to pull back, with technology stocks accounting for most of the market's largest decliners.
A key reason for this trend is that much of the recent market gains were concentrated in the "AI trade," which includes these large technology and semiconductor companies. So this could also mean that some investors are locking in some gains ahead of more definitive feedback from the Fed. Despite the downturn, some analysts viewed this as an opportunity to own some of the "Core AI winners." Dan Ives of Wedbush Securities commented, "In our view, the tech bull cycle will be well intact for at least another 2-3 years, given the trillions being spent on AI infrastructure/software/chips/power/apps looking ahead. This remains our tech playbook and investor roadmap." Additionally, mixed earnings reports from retailers, such as Target, have added to the market's weakness. Investors are closely monitoring these reports for insights into the broader economic health and the potential impact of new tariffs on inflation.
Opendoor is up 189% since the beginning of the year, and at $4.60 per share, has set a new 52-week high. Investors who bought $1,000 worth of Opendoor’s shares 5 years ago would now be looking at an investment worth $418.82.
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