What Happened?
Shares of breakfast restaurant chain First Watch Restaurant Group (NASDAQ: FWRG) jumped 5.7% in the afternoon session after the broader market rallied amid signs that a trade conflict between the U.S. and China might not be as severe as initially feared.
This move followed a rout in the previous trading session where investors' moods were hurt by escalating trade conflicts. However, sentiment reversed after U.S. officials, including the president, made comments that opened a door to a possible deal with China, offering some comfort to investors. The positive shift was reflected in the wider market, with the S&P 500 index rising by 1.1% and the tech-focused Nasdaq Composite index gaining 1.7%, lifting individual stocks along with them.
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What Is The Market Telling Us
First Watch’s shares are very volatile and have had 27 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 4.2% on the news that President Donald Trump threatened to impose "massive" tariffs on Chinese products, reigniting trade war fears. The unexpected social media post was a stated countermeasure to Beijing's recent announcement of new export controls on rare-earth minerals. These minerals are critical components for manufacturing everything from consumer electronics to jet engines, and the news jolted a previously calm Wall Street. The renewed fears of a trade war sent all major indices into negative territory. The tech-heavy Nasdaq Composite saw the steepest decline, falling 1.7%, as investors weighed the potential impact of supply chain disruptions for key manufacturing components.
First Watch is down 14.7% since the beginning of the year, and at $16.02 per share, it is trading 27.9% below its 52-week high of $22.23 from February 2025. Investors who bought $1,000 worth of First Watch’s shares at the IPO in September 2021 would now be looking at an investment worth $723.90.
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