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. The positive sentiment followed comments from New York Federal Reserve President John Williams, a voting member of the rate-setting Federal Open Market Committee (FOMC), who indicated he sees room for further policy easing. Following his remarks, the probability of a December rate cut surged from 39% to 71%, according to the CME FedWatch Tool, causing Treasury yields to fall. Lower interest rates can be particularly beneficial for growth-oriented sectors like software, as they increase the present value of future earnings. This renewed hope provided a boost to the sector, which had recently faced pressure from concerns over high valuations in artificial intelligence.

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:

• Document Management company Box (NYSE: BOX) jumped 4.3%. Is now the time to buy Box? Access our full analysis report here, it’s free for active Edge members.
• Vulnerability Management company Qualys (NASDAQ: QLYS) jumped 4.5%. Is now the time to buy Qualys? Access our full analysis report here, it’s free for active Edge members.
• Video Conferencing company RingCentral (NYSE: RNG) jumped 4.9%. Is now the time to buy RingCentral? Access our full analysis report here, it’s free for active Edge members.
• Video Conferencing company 8x8 (NASDAQ: EGHT) jumped 4.9%. Is now the time to buy 8x8? Access our full analysis report here, it’s free for active Edge members.
• Hospitality & Restaurant Software company Toast (NYSE: TOST) jumped 4.7%. Is now the time to buy Toast? Access our full analysis report here, it’s free for active Edge members.

Zooming In On 8x8 (EGHT)

8x8’s shares are extremely volatile and have had 45 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 1 day ago when the stock gained 3.2% on the news that strong results from chipmaker Nvidia, eased lingering concerns about a potential bubble in the artificial intelligence sector. 

The tech giant delivered another blockbuster earnings report, with sales, profits, and guidance exceeding Wall Street expectations. CEO Jensen Huang let the data do the talking as he acknowledged the growing sentiment about an AI bubble, while affirming that sales for Nvidia's current-generation GPU, called Blackwell (mostly used for AI applications), are "off the charts." A stronger-than-expected September jobs report from the Bureau of Labor Statistics reinforced this bullish sentiment. Nonfarm payrolls rose by 119,000, easily surpassing the consensus estimates of 50,000. While the unemployment rate ticked up to 4.4% and wage growth slowed slightly, the data suggest the U.S. economy remains on a firm footing. While this resilience made some investors unsure of the Fed's December rate decision, the market welcomed the news, rallying on the strength of a solid economy and a booming tech sector.

8x8 is down 27.5% since the beginning of the year, and at $1.93 per share, it is trading 44.4% below its 52-week high of $3.47 from February 2025. Investors who bought $1,000 worth of 8x8’s shares 5 years ago would now be looking at an investment worth $98.97.

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