What Happened?

A number of stocks jumped in the afternoon session after comments from a key Federal Reserve official hinted at a potential interest rate cut in December. John Williams, president of the Federal Reserve Bank of New York, signaled he was open to lowering the fed funds rate—the key interest rate that banks charge each other for overnight loans—to support the job market. Speaking at an event, Williams stated that he sees “room for a further adjustment” for interest rates, which immediately shifted market expectations. Following his remarks, the perceived likelihood of an interest rate cut at the Federal Reserve's December meeting flipped from unlikely to more likely than not. The prospect of lower borrowing costs sent a wave of optimism through the markets, leading to a rally in major indices like the S&P 500, Dow Jones Industrial Average, and the Nasdaq Composite.

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:

• Digital Media & Content Platforms company Getty Images (NYSE: GETY) jumped 5.7%. Is now the time to buy Getty Images? Access our full analysis report here, it’s free for active Edge members.
• IT Services & Consulting company Grid Dynamics (NASDAQ: GDYN) jumped 6%. Is now the time to buy Grid Dynamics? Access our full analysis report here, it’s free for active Edge members.
• Specialized Technology company Zebra (NASDAQ: ZBRA) jumped 5.7%. Is now the time to buy Zebra? Access our full analysis report here, it’s free for active Edge members.
• Professional Staffing & HR Solutions company ManpowerGroup (NYSE: MAN) jumped 6%. Is now the time to buy ManpowerGroup? Access our full analysis report here, it’s free for active Edge members.

Zooming In On Grid Dynamics (GDYN)

Grid Dynamics’s shares are very volatile and have had 22 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 17 days ago when the stock dropped 2.7% on the news that markets became increasingly wary of high valuations following a significant AI-driven rally. The tech-heavy Nasdaq fell approximately 1.4% as a wave of caution swept through the market. 

A key example of this trend is Palantir Technologies, which saw its shares drop around 7% despite reporting record quarterly results that surpassed analyst estimates and raising its full-year revenue outlook. This seemingly contradictory movement highlighted a broader sentiment shift. Investors appeared to be engaging in profit-taking, concerned that the recent surge in AI-related stocks had led to stretched valuations. This broader market caution affected high-growth technology companies that had previously surged on AI optimism but faced increased scrutiny, signaling a potential cooling-off period for the sector. Adding serious weight to this caution, leadership at both Goldman Sachs and Morgan Stanley highlighted the possibility of a correction in the equity markets over the next couple of years. Despite the euphoria driven by AI optimism and the promise of future rate cuts, these banks viewed this cooling-off period not as a disaster, but as a necessary and healthy feature of a long-term bull market.

Grid Dynamics is down 61.1% since the beginning of the year, and at $8.57 per share, it is trading 64.4% below its 52-week high of $24.05 from February 2025. Investors who bought $1,000 worth of Grid Dynamics’s shares 5 years ago would now be looking at an investment worth $861.67.

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