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:
- Building Materials company Sherwin-Williams (NYSE: SHW) jumped 3.6%. Is now the time to buy Sherwin-Williams? Access our full analysis report here, it’s free.
- Industrial Packaging company Sealed Air (NYSE: SEE) jumped 3.7%. Is now the time to buy Sealed Air? Access our full analysis report here, it’s free.
- Hardware & Infrastructure company Super Micro (NASDAQ: SMCI) jumped 4.1%. Is now the time to buy Super Micro? Access our full analysis report here, it’s free.
- Medical Devices & Supplies - Specialty company Globus Medical (NYSE: GMED) jumped 3.6%. Is now the time to buy Globus Medical? Access our full analysis report here, it’s free.
- Medical Devices & Supplies - Specialty company Haemonetics (NYSE: HAE) jumped 3.9%. Is now the time to buy Haemonetics? Access our full analysis report here, it’s free.
Zooming In On Super Micro (SMCI)
Super Micro’s shares are extremely volatile and have had 85 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 4.9% on the news that investors took some profits off the table as markets awaited signals on future monetary policy from the Federal Reserve's Jackson Hole symposium later in the week. The downturn in the market was largely attributed to a significant sell-off in megacap tech and chipmaker shares. Nvidia, Advanced Micro Devices (AMD), and Broadcom all saw notable drops, dragging down the VanEck Semiconductor ETF. Other major tech-related companies like Tesla, Meta Platforms, and Netflix were also under pressure. A key reason for this trend is that much of the recent market gains have been 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.
Super Micro is up 46.7% since the beginning of the year, but at $44.07 per share, it is still trading 28.1% below its 52-week high of $61.32 from August 2024. Investors who bought $1,000 worth of Super Micro’s shares 5 years ago would now be looking at an investment worth $16,530.
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