What Happened?
A number of stocks jumped in the morning session after President Trump clarified that he had no intention of removing Federal Reserve Chair Jerome Powell, a statement that helped calm markets. Earlier remarks had sparked fears of political interference in decision-making at the central bank. With Trump walking back his earlier comments, investors likely felt more assured that monetary policy decisions would continue to be guided by data, not drama. That kept the Fed's word credible, and more importantly, gave investors a steadier compass to figure out where rates and the markets were headed next.
Adding to the positive news, the president made constructive comments on US-China trade talks, noting that the tariffs imposed on China were "very high, and it won't be that high. ... No, it won't be anywhere near that high. It'll come down substantially. But it won't be zero."
Also, a key force at the center of the stock market's massive two-day rally was the frantic behavior of short sellers covering their losses. Hedge fund short sellers recently added more bearish wagers in both single stocks and securities tied to macro developments after the whipsaw early April triggered by President Donald Trump's tariff rollout and abrupt 90-day pause, according to Goldman Sachs' prime brokerage data. The increased short position in the market created an environment prone to dramatic upswings due to this artificial buying force.
A short seller borrows an asset and quickly sells it; when the security decreases in price, they buy it back more cheaply to profit from the difference.
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:
- Identity Management company Okta (NASDAQ: OKTA) jumped 6.6%. Is now the time to buy Okta? Access our full analysis report here, it’s free.
- Data Storage company Snowflake (NYSE: SNOW) jumped 7.6%. Is now the time to buy Snowflake? Access our full analysis report here, it’s free.
- Automation Software company Appian (NASDAQ: APPN) jumped 11.8%. Is now the time to buy Appian? Access our full analysis report here, it’s free.
- Processors and Graphics Chips company Allegro MicroSystems (NASDAQ: ALGM) jumped 8.4%. Is now the time to buy Allegro MicroSystems? Access our full analysis report here, it’s free.
- Processors and Graphics Chips company Lattice Semiconductor (NASDAQ: LSCC) jumped 7.4%. Is now the time to buy Lattice Semiconductor? Access our full analysis report here, it’s free.
Zooming In On Appian (APPN)
Appian’s shares are quite volatile and have had 18 moves greater than 5% over the last year. But moves this big are rare even for Appian and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 12 months ago when the stock dropped 23.1% on the news that the company reported weak first-quarter 2024 results with revenue guidance for the next quarter, missing analysts' expectations, while full-year revenue guidance was roughly in line. While revenue beat slightly, billings (often analyzed in addition to revenue because it's cash in the door rather than recognized revenue dictated by accounting rules) missed Wall Street's estimates. Overall, this was a weaker quarter for Appian.
Appian is down 10.2% since the beginning of the year, and at $29.82 per share, it is trading 28.2% below its 52-week high of $41.56 from November 2024. Investors who bought $1,000 worth of Appian’s shares 5 years ago would now be looking at an investment worth $708.82.
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