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:

• Engineered Components and Systems company Park-Ohio (NASDAQ: PKOH) jumped 5.4%. Is now the time to buy Park-Ohio? Access our full analysis report here, it’s free.
• Construction and Maintenance Services company Orion (NYSE: ORN) jumped 4.5%. Is now the time to buy Orion? Access our full analysis report here, it’s free.
• Construction and Maintenance Services company Great Lakes Dredge & Dock (NASDAQ: GLDD) jumped 4.2%. Is now the time to buy Great Lakes Dredge & Dock? Access our full analysis report here, it’s free.
• Automobile Manufacturing company Rivian (NASDAQ: RIVN) jumped 5.4%. Is now the time to buy Rivian? Access our full analysis report here, it’s free.
• Electronic Components company Allient (NASDAQ: ALNT) jumped 3.8%. Is now the time to buy Allient? Access our full analysis report here, it’s free.

Zooming In On Rivian (RIVN)

Rivian’s shares are extremely volatile and have had 33 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 6 days ago when the stock dropped 4.8% on the news that the company recalled over 24,000 of its 2025 model year R1T and R1S vehicles due to a software issue. 

The safety concern involved the hands-free highway assist system, which may not correctly identify a lead vehicle, increasing the risk of a crash. Compounding the negative sentiment, Rivian highlighted significant short-term headwinds at a Morgan Stanley conference. The company noted that the expiration of the $7,500 consumer tax credit and the removal of revenue from greenhouse gas credits impacted its finances.

Rivian is up 11% since the beginning of the year, but at $14.70 per share, it is still trading 13.1% below its 52-week high of $16.92 from May 2025. Investors who bought $1,000 worth of Rivian’s shares at the IPO in November 2021 would now be looking at an investment worth $145.95.

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