What Happened?
A number of stocks jumped in the afternoon session after investors scooped up equities, shaking off the initial concerns inferred from the Fed's dot plot, with tech stocks leading the charge.
As a reminder, the Federal Reserve cut its benchmark interest rate by 25 basis points yesterday and signaled that more reductions could come before year-end and beyond. Initially when the cut was announced and Fed Chair Powell held his press conference, there was a pullback in the market as the Fed's "dot plot" revealed that only one cut was likely for 2026. This was below the three cuts that had been priced into the markets. This was the first interest rate cut of 2025, a move investors had widely anticipated. In response to the decision, stocks rose significantly, positioning major indexes like the S&P 500 and Nasdaq to open at record levels.
The Fed's decision was influenced by signs of a weakening labor market. Lower interest rates are generally seen as positive for stocks because they reduce borrowing costs for businesses and make fixed-income investments like bonds less attractive by comparison, driving capital into the equity market. While Fed Chair Powell noted the path forward has risks, the prospect of looser monetary policy has fueled optimism on Wall Street.
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:
- Renewable Energy company Plug Power (NASDAQ: PLUG) jumped 4.7%. Is now the time to buy Plug Power? Access our full analysis report here, it’s free.
- Electrical Systems company Powell (NASDAQ: POWL) jumped 4.6%. Is now the time to buy Powell? Access our full analysis report here, it’s free.
- Electronic Components company Novanta (NASDAQ: NOVT) jumped 4.6%. Is now the time to buy Novanta? Access our full analysis report here, it’s free.
- Electronic Components company Vishay Precision (NYSE: VPG) jumped 3.9%. Is now the time to buy Vishay Precision? Access our full analysis report here, it’s free.
- Construction and Maintenance Services company Concrete Pumping (NASDAQ: BBCP) jumped 4.4%. Is now the time to buy Concrete Pumping? Access our full analysis report here, it’s free.
Zooming In On Plug Power (PLUG)
Plug Power’s shares are extremely volatile and have had 99 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 1 day ago when the stock gained 6.5% on the news that the stock extended its positive momentum from the previous day, fueled by favorable analyst commentary, strong sales figures, and significant bullish options activity.
The rally built on news that highlighted robust operational performance. An analyst from BTIG, while keeping a 'Hold' rating, pointed to a more than tripling of year-over-year sales for Plug Power's Electrolyzer products in the second quarter. This sales surge helped drive a 21% jump in the company's total revenue. Adding to the good news, the company secured an extended contract with logistics firm Uline through 2030 and forged a new partnership in Brazil. Underscoring the positive mood, traders flocked to the options market, where the volume of call options—bets that the stock will rise—jumped 80% above the daily average.
Plug Power is down 11.8% since the beginning of the year, and at $2.06 per share, it is trading 34.8% below its 52-week high of $3.15 from January 2025. Investors who bought $1,000 worth of Plug Power’s shares 5 years ago would now be looking at an investment worth $151.55.
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