What Happened?
A number of stocks jumped in the afternoon session after the Federal Reserve lowered its benchmark interest rate by a quarter-percentage point, signaling a more accommodative monetary policy.
This dovish action, combined with highly accommodating signals from Chair Jerome Powell and the Federal Open Market Committee (FOMC), sent the Dow Jones Industrial Average and S&P 500 surging. The market's bullish reaction was rooted in several key takeaways from the Fed's announcement. Most significantly, the central bank confirmed it would begin expanding its balance sheet by buying short-term bonds, a move that injects critical liquidity and lowers short-term Treasury yields. Furthermore, the Fed signaled a shift in priority by removing language that described the labor market as "remaining low," suggesting it would be more focused on supporting economic growth. While the Fed's official forecast projected only one cut for the next year, traders immediately priced in the expectation of more aggressive easing, banking on at least two rate reductions. This widespread anticipation of sustained, low borrowing costs and the virtual certainty that rate hikes would be off the table boosted corporate valuations and created powerful momentum for the equity market rally.
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:
- Renewable Energy company SolarEdge (NASDAQ: SEDG) jumped 6.8%. Is now the time to buy SolarEdge? Access our full analysis report here, it’s free for active Edge members.
- Engineered Components and Systems company Mayville Engineering (NYSE: MEC) jumped 6.9%. Is now the time to buy Mayville Engineering? Access our full analysis report here, it’s free for active Edge members.
- Gas and Liquid Handling company Standex (NYSE: SXI) jumped 7.5%. Is now the time to buy Standex? Access our full analysis report here, it’s free for active Edge members.
- Aerospace company Rocket Lab (NASDAQ: RKLB) jumped 7.3%. Is now the time to buy Rocket Lab? Access our full analysis report here, it’s free for active Edge members.
- Ground Transportation company Universal Logistics (NASDAQ: ULH) jumped 9.1%. Is now the time to buy Universal Logistics? Access our full analysis report here, it’s free for active Edge members.
Zooming In On Universal Logistics (ULH)
Universal Logistics’s shares are extremely volatile and have had 30 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 20 days ago when the stock dropped 2.8% on the news that markets faded the Nvidia rally in the morning session, as investors remained uncertain about future rate cuts.
While the trading day began with significant enthusiasm, pushing the Dow Jones Industrial Average up more than 700 points and the Nasdaq Composite up 2.6%, momentum quickly evaporated as the session wore on. The primary catalyst for this sharp reversal was a stronger-than-expected jobs report, which reduced the implied odds of a December interest rate cut to less than 40%. This macroeconomic anxiety overshadowed stellar corporate performance. Nvidia initially surged 5% on blockbuster earnings and CEO Jensen Huang's bullish outlook on "off the charts" demand for Blackwell chips. However, the stock eventually turned negative, acting as a heavy weight that dragged the broader indices into the red. The sell-off partly reflects a deepening caution regarding high-flying tech valuations in a "higher-for-longer" rate environment. Consequently, investors appeared to rotate capital away from volatile growth sectors and toward defensive staples, evidenced by Walmart's 6% gain following its own earnings beat. Ultimately, the market could not sustain the morning's euphoria, as traders prioritized rate realities over AI potential.
Universal Logistics is down 60.3% since the beginning of the year, and at $17.35 per share, it is trading 64.8% below its 52-week high of $49.33 from December 2024. Investors who bought $1,000 worth of Universal Logistics’s shares 5 years ago would now be looking at an investment worth $794.05.
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