What Happened?
A number of stocks fell in the afternoon session after Federal Reserve Chair Jerome Powell signaled a cautious stance on future monetary policy decisions during a speech in Chicago, emphasizing that trade tariffs could add upward pressure to inflation in the short term and complicate the Fed's efforts to stabilize the economy.
He warned that such trade measures are "likely to move us further away from our goals," referring to the Fed's dual mandate of price stability and maximum employment.
The comments did little to improve sentiment, as major indices were already in the negative territory in the morning session after Nvidia announced it might be unable to sell some high-end chips (including the H20 chips) to China due to export controls and requirements from the Trump administration. As a result, the company planned to take a $5.5 billion charge due to inventory writedowns and canceled sales. Adding to the sector's pressure, chip tool maker ASML posted weak bookings (a key demand indicator) which fell below Wall Street's expectations, noting that tariffs had made the industry's outlook more uncertain.
Taken together, these updates likely fueled investor anxiety, amplifying concerns about global trade tensions, tech sector vulnerability, and the Fed's limited room to maneuver in an increasingly uncertain macro environment.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, following stocks were impacted:
- Automation Software company SoundHound AI (NASDAQ: SOUN) fell 8%. Is now the time to buy SoundHound AI? Access our full analysis report here, it’s free.
- Data Analytics company Domo (NASDAQ: DOMO) fell 14.6%. Is now the time to buy Domo? Access our full analysis report here, it’s free.
- Renewable Energy company Plug Power (NASDAQ: PLUG) fell 8.9%. Is now the time to buy Plug Power? Access our full analysis report here, it’s free.
- Branded Pharmaceuticals company Corcept (NASDAQ: CORT) fell 8.1%. Is now the time to buy Corcept? Access our full analysis report here, it’s free.
- Video Conferencing company 8x8 (NASDAQ: EGHT) fell 6.1%. Is now the time to buy 8x8? Access our full analysis report here, it’s free.
Zooming In On Domo (DOMO)
Domo’s shares are very volatile and have had 22 moves greater than 5% over the last year. But moves this big are rare even for Domo and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 4 months ago when the stock dropped 19.5% on the news that the company reported underwhelming third-quarter 2024 results. Billings in the quarter missed meaningfully, although revenue beat. Looking ahead, the company lowered full-year adjusted EPS guidance despite slightly raising full-year revenue guidance. This was a signal of worse future profitability and expense efficiency. Overall, it was a challenging quarter.
Domo is up 0.8% since the beginning of the year, but at $7.14 per share, it is still trading 28.5% below its 52-week high of $9.98 from December 2024. Investors who bought $1,000 worth of Domo’s shares 5 years ago would now be looking at an investment worth $491.74.
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