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:
- Electrical Systems company Sanmina (NASDAQ: SANM) jumped 3.1%. Is now the time to buy Sanmina? Access our full analysis report here, it’s free.
- Heavy Transportation Equipment company Greenbrier (NYSE: GBX) jumped 3.5%. Is now the time to buy Greenbrier? Access our full analysis report here, it’s free.
- Law Enforcement Suppliers company Byrna (NASDAQ: BYRN) jumped 3%. Is now the time to buy Byrna? Access our full analysis report here, it’s free.
- Defense Contractors company BWX (NYSE: BWXT) jumped 3.4%. Is now the time to buy BWX? Access our full analysis report here, it’s free.
- Engineered Components and Systems company Worthington (NYSE: WOR) jumped 3.2%. Is now the time to buy Worthington? Access our full analysis report here, it’s free.
Zooming In On Greenbrier (GBX)
Greenbrier’s shares are not very volatile and have only had 9 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 3 months ago when the stock gained 19% on the news that the company posted much stronger-than-expected results for its fiscal third quarter and raised its profitability guidance for the full year.
The railcar manufacturer reported quarterly earnings of $1.86 per share, handily beating analyst estimates of 98 cents. Sales also beat by a decent margin. The company achieved an aggregate gross margin of 18%, marking the seventh consecutive quarter it has met or exceeded its mid-teens target. Buoyed by the strong performance, Greenbrier raised its full-year guidance for both gross margin and operating margin. The company also highlighted new railcar orders for 3,900 units, valued at over $500 million, and a robust backlog of 18,900 units worth $2.5 billion. Additionally, the board declared its 45th consecutive quarterly dividend and noted ongoing share repurchases.
Greenbrier is down 23.1% since the beginning of the year, and at $47.02 per share, it is trading 33.5% below its 52-week high of $70.70 from January 2025. Investors who bought $1,000 worth of Greenbrier’s shares 5 years ago would now be looking at an investment worth $1,615.
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