What Happened?
A number of stocks jumped in the afternoon session after comments from a key Federal Reserve official bolstered hopes for an interest rate cut. New York Federal Reserve President John Williams stated he sees “room for a further adjustment” in the near term, sparking a significant market rally. Following his remarks, the probability of the central bank cutting rates at its December meeting jumped from 39% to over 73%, according to the CME FedWatch tool. This positive sentiment provided relief to markets amid concerns over high valuations, particularly in AI-related stocks.
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:
- Toys and Electronics company Bark (NYSE:BARK) jumped 9.5%. Is now the time to buy Bark? Access our full analysis report here, it’s free for active Edge members.
- Footwear company Wolverine Worldwide (NYSE:WWW) jumped 8.5%. Is now the time to buy Wolverine Worldwide? Access our full analysis report here, it’s free for active Edge members.
- Footwear company Genesco (NYSE:GCO) jumped 9.3%. Is now the time to buy Genesco? Access our full analysis report here, it’s free for active Edge members.
- Footwear company Caleres (NYSE:CAL) jumped 9.4%. Is now the time to buy Caleres? Access our full analysis report here, it’s free for active Edge members.
- Travel and Vacation Providers company Marriott Vacations (NYSE:VAC) jumped 9.1%. Is now the time to buy Marriott Vacations? Access our full analysis report here, it’s free for active Edge members.
Zooming In On Bark (BARK)
Bark’s shares are extremely volatile and have had 42 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 3.6% on the news that the broader U.S. stock market declined amid investor caution and a pullback in technology stocks.
The main story? Investors are cashing in on a good run and feeling a bit cautious. After a fantastic run, many of those high-flying AI and technology stocks saw investors take profits: selling shares to lock in their gains. This is often called a "market rotation." Money is moving out of the red-hot tech sector (which some worry has become too expensive) and into other parts of the market that investors may currently deem more stable or reasonably-priced. There's a secondary reason for the cautious mood: The long government shutdown came to an end. Though it's typically interpreted as good news, it also means a flood of delayed economic reports will be released. For weeks, investors were "flying blind" without key updates on the economy's health, like inflation data and the jobs report. In typical "sell the news" fashion, investors may also be taking profits and selling in anticipation that the new data would potentially give the Federal Reserve reasons to slow or even pause future rate cuts.
Bark is down 61.4% since the beginning of the year, and at $0.73 per share, it is trading 69.6% below its 52-week high of $2.40 from December 2024. Investors who bought $1,000 worth of Bark’s shares at the IPO in December 2020 would now be looking at an investment worth $58.79.
While Wall Street chases Nvidia at all-time highs, an under-the-radar semiconductor supplier is dominating a critical AI component these giants can’t build without. Click here to access our full research report.