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:

• Advertising Software company Integral Ad Science (NASDAQ: IAS) jumped 3%. Is now the time to buy Integral Ad Science? Access our full analysis report here, it’s free.
• Automation Software company SoundHound AI (NASDAQ: SOUN) jumped 4%. Is now the time to buy SoundHound AI? Access our full analysis report here, it’s free.
• Content Delivery company Fastly (NYSE: FSLY) jumped 3.6%. Is now the time to buy Fastly? Access our full analysis report here, it’s free.
• Video Conferencing company Five9 (NASDAQ: FIVN) jumped 2.9%. Is now the time to buy Five9? Access our full analysis report here, it’s free.
• Design Software company Cadence Design Systems (NASDAQ: CDNS) jumped 5.1%. Is now the time to buy Cadence Design Systems? Access our full analysis report here, it’s free.

Zooming In On Cadence Design Systems (CDNS)

Cadence Design Systems’s shares are somewhat volatile and have had 14 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 8 days ago when the stock dropped 8.3% on the news that its competitor in the chip design software space, Synopsys, reported disappointing quarterly results and cited business headwinds. 

Synopsys, a semiconductor software powerhouse, saw its own shares plunge after it missed Wall Street's revenue estimates and lowered its full-year outlook, citing challenges linked to US-China tensions. The negative report from a key industry player sparked broader concerns, creating a ripple effect across the semiconductor sector. Investors grew wary of wider risks, leading to a sell-off in peer companies. The drop in Cadence's stock reflects investor concern that the issues impacting Synopsys could be indicative of a slowdown for the entire industry.

Cadence Design Systems is up 22.7% since the beginning of the year, and at $365.19 per share, it is trading close to its 52-week high of $371.03 from July 2025. Investors who bought $1,000 worth of Cadence Design Systems’s shares 5 years ago would now be looking at an investment worth $3,661.

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