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:
- Energy Products and Services company Quanta (NYSE: PWR) jumped 4.2%. Is now the time to buy Quanta? Access our full analysis report here, it’s free.
- Maintenance and Repair Distributors company Transcat (NASDAQ: TRNS) jumped 4.5%. Is now the time to buy Transcat? Access our full analysis report here, it’s free.
- Water Infrastructure company Energy Recovery (NASDAQ: ERII) jumped 4%. Is now the time to buy Energy Recovery? Access our full analysis report here, it’s free.
- Electrical Systems company Kimball Electronics (NASDAQ: KE) jumped 5.3%. Is now the time to buy Kimball Electronics? Access our full analysis report here, it’s free.
- Gas and Liquid Handling company Standex (NYSE: SXI) jumped 4.7%. Is now the time to buy Standex? Access our full analysis report here, it’s free.
Zooming In On Kimball Electronics (KE)
Kimball Electronics’s shares are somewhat volatile and have had 11 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 9 days ago when the stock dropped 3.2% on the news that concerns about the health of the U.S. economy grew following a significant downward revision of job market data.
The Labor Department reported that employers added 911,000 fewer jobs from April 2024 through March than initially estimated. These "benchmark revisions" are issued annually to more accurately account for new and defunct businesses. The report detailed that the leisure and hospitality sector added 176,000 fewer jobs, professional and business services 158,000 fewer, and retailers 126,000 fewer. This weaker-than-expected data has fueled investor anxiety, as it suggests businesses may be becoming more reluctant to hire amid economic uncertainty. The numbers issued are preliminary, with final revisions scheduled for February 2026.
JPMorgan Chase CEO Jamie Dimon added that the U.S. economy is "weakening," though he stopped short of predicting a recession. "Whether it's on the way to recession or just weakening, I don't know," he said. Dimon's remarks are closely watched, given his influence as head of one of the nation's largest banks.
Kimball Electronics is up 81.6% since the beginning of the year, and at $33.40 per share, has set a new 52-week high. Investors who bought $1,000 worth of Kimball Electronics’s shares 5 years ago would now be looking at an investment worth $2,655.
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