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:

• Construction and Maintenance Services company Construction Partners (NASDAQ: ROAD) jumped 4.8%. Is now the time to buy Construction Partners? Access our full analysis report here, it’s free.
• Heavy Transportation Equipment company Wabash (NYSE: WNC) jumped 4.7%. Is now the time to buy Wabash? Access our full analysis report here, it’s free.
• Commercial Building Products company AZZ (NYSE: AZZ) jumped 3.9%. Is now the time to buy AZZ? Access our full analysis report here, it’s free.
• Construction and Maintenance Services company Primoris (NYSE: PRIM) jumped 4.4%. Is now the time to buy Primoris? Access our full analysis report here, it’s free.
• Home Construction Materials company Gibraltar (NASDAQ: ROCK) jumped 4.5%. Is now the time to buy Gibraltar? Access our full analysis report here, it’s free.

Zooming In On Construction Partners (ROAD)

Construction Partners’s shares are very volatile and have had 20 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 biggest move we wrote about over the last year was 7 months ago when the stock gained 8% on the news that the company reported strong fourth-quarter results, which blew past analysts' sales and EPS expectations. In addition, its EBITDA outperformed Wall Street's estimates by a wide margin. Guidance was also encouraging, with the company lifting full-year revenue guidance. The growth outlook was informed by strong industry tailwinds in some of the company's operating regions. The company is also benefiting from tuck-in acquisitions which drove the larger portion of the 42% y/y growth during the quarter. Zooming out, we think this quarter featured some important positives.

Construction Partners is up 51.4% since the beginning of the year, and at $133 per share, has set a new 52-week high. Investors who bought $1,000 worth of Construction Partners’s shares 5 years ago would now be looking at an investment worth $7,244.

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