What Happened?

A number of stocks jumped in the afternoon session after the major indices popped (Nasdaq +3.4%, S&P 500 +2.5%) in response to the positive outcome of U.S.-China trade negotiations, as both sides agreed to pause some tariffs for 90 days, signaling a potential turning point in ongoing tensions. This rollback cuts U.S. tariffs on Chinese goods to 30% and Chinese tariffs on U.S. imports to 10%, giving companies breathing room to reset inventories and supply chains. 

However, President Trump clarified that tariffs could go "substantially higher" if a full deal with China wasn't reached during the 90-day pause, but not all the way back to the previous levels. 

Still, the agreement has cooled fears of a prolonged trade war, helping stabilize expectations for global growth and trade flows and fueling renewed optimism. 

The optimism appeared concentrated in key trade-sensitive sectors, particularly technology, retail, and industrials, as lower tariffs reduce cost pressures and restore cross-border demand.

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:

• IT Services & Consulting company EPAM (NYSE: EPAM) jumped 5.7%. Is now the time to buy EPAM? Access our full analysis report here, it’s free.
• IT Distribution & Solutions company CDW (NASDAQ: CDW) jumped 6%. Is now the time to buy CDW? Access our full analysis report here, it’s free.
• Specialized Technology company Cognex (NASDAQ: CGNX) jumped 7.4%. Is now the time to buy Cognex? Access our full analysis report here, it’s free.
• IT Services & Consulting company DXC (NYSE: DXC) jumped 5.2%. Is now the time to buy DXC? Access our full analysis report here, it’s free.
• Hardware & Infrastructure company NetApp (NASDAQ: NTAP) jumped 5.2%. Is now the time to buy NetApp? Access our full analysis report here, it’s free.

Zooming In On Cognex (CGNX)

Cognex’s shares are somewhat volatile and have had 10 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.

Cognex is down 11.4% since the beginning of the year, and at $31.62 per share, it is trading 40.2% below its 52-week high of $52.91 from July 2024. Investors who bought $1,000 worth of Cognex’s shares 5 years ago would now be looking at an investment worth $566.13.

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