What Happened?
A number of stocks jumped in the afternoon session after optimism surged over a potential trade truce between the U.S. and China. Reports of progress in trade negotiations ahead of a scheduled meeting between the two nations' presidents fueled investor confidence. An agreement would likely ease trade tensions and reduce or remove tariffs that have created economic uncertainty and higher costs for many multinational corporations. Also, optimism improved on expectations that the Federal Reserve will cut interest rates later in the week, especially after recent data showed inflation wasn't heating up as much as expected. Simply put, good news on trade, and the promise of lower borrowing costs created a powerful rally.
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:
- Financial Technology company Robinhood (NASDAQ: HOOD) jumped 5.4%. Is now the time to buy Robinhood? Access our full analysis report here, it’s free for active Edge members.
- Online Marketplace company Etsy (NASDAQ: ETSY) jumped 2.6%. Is now the time to buy Etsy? Access our full analysis report here, it’s free for active Edge members.
- Online Marketplace company The RealReal (NASDAQ: REAL) jumped 2.8%. Is now the time to buy The RealReal? Access our full analysis report here, it’s free for active Edge members.
- Online Retail company Revolve (NYSE: RVLV) jumped 4.1%. Is now the time to buy Revolve? Access our full analysis report here, it’s free for active Edge members.
- Online Marketplace company Sea (NYSE: SE) jumped 3.6%. Is now the time to buy Sea? Access our full analysis report here, it’s free for active Edge members.
Zooming In On Robinhood (HOOD)
Robinhood’s shares are extremely volatile and have had 58 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 gained 4% on the news that the release of a cooler-than-expected inflation report fueled optimism for a potential interest rate cut from the Federal Reserve. The September Consumer Price Index (CPI) indicated a 3.0% year-over-year rise, slightly below the 3.1% forecast. Investors viewed this as a positive sign that inflation is moderating, increasing the probability of a more accommodative monetary policy from the central bank. A potential rate cut is seen as a significant catalyst for the tech sector, as lower borrowing costs can enhance profitability and encourage companies to reinvest in growth and innovation. This renewed confidence was reflected in the market's broad gains, with technology and semiconductor stocks leading the charge.
Robinhood is up 271% since the beginning of the year, and at $146.12 per share, it is trading close to its 52-week high of $152.46 from October 2025. Investors who bought $1,000 worth of Robinhood’s shares at the IPO in July 2021 would now be looking at an investment worth $4,198.
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