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:
- Electrical Systems company Vertiv (NYSE: VRT) jumped 2.8%. Is now the time to buy Vertiv? Access our full analysis report here, it’s free for active Edge members.
- Engineered Components and Systems company NN (NASDAQ: NNBR) jumped 3.8%. Is now the time to buy NN? Access our full analysis report here, it’s free for active Edge members.
- Construction Machinery company Terex (NYSE: TEX) jumped 3%. Is now the time to buy Terex? Access our full analysis report here, it’s free for active Edge members.
- Marine Transportation company Matson (NYSE: MATX) jumped 4.7%. Is now the time to buy Matson? Access our full analysis report here, it’s free for active Edge members.
- Law Enforcement Suppliers company Byrna (NASDAQ: BYRN) jumped 3.5%. Is now the time to buy Byrna? Access our full analysis report here, it’s free for active Edge members.
Zooming In On Matson (MATX)
Matson’s shares are somewhat volatile and have had 11 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 14 days ago when the stock gained 3% on the news that a softened tone from President Donald Trump on U.S.-China relations boosted investor sentiment. The positive shift followed a weekend post on Truth Social where Trump stated, "Don't worry about China, it will all be fine!" and expressed a desire to help rather than hurt the country's economy. This statement provided significant relief to markets that had ended the prior week with steep losses. In response, the Nasdaq Composite jumped 2.2%, the S&P 500 gained 1.6%, and the Dow Jones Industrial Average closed 1.3% higher, as investors' fears of escalating trade tensions subsided.
Matson is down 28.9% since the beginning of the year, and at $98 per share, it is trading 41.4% below its 52-week high of $167.37 from November 2024. Investors who bought $1,000 worth of Matson’s shares 5 years ago would now be looking at an investment worth $1,899.
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