What Happened?
A number of stocks jumped in the afternoon session after comments from a key Federal Reserve official hinted at a potential interest rate cut in December.
John Williams, president of the Federal Reserve Bank of New York, signaled he was open to lowering the fed funds rate—the key interest rate that banks charge each other for overnight loans—to support the job market. Speaking at an event, Williams stated that he sees “room for a further adjustment” for interest rates, which immediately shifted market expectations. Following his remarks, the perceived likelihood of an interest rate cut at the Federal Reserve's December meeting flipped from unlikely to more likely than not. The prospect of lower borrowing costs sent a wave of optimism through the markets, leading to a rally in major indices like the S&P 500, Dow Jones Industrial Average, and the Nasdaq Composite.
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:
- Professional Staffing & HR Solutions company Robert Half (NYSE:RHI) jumped 6.4%. Is now the time to buy Robert Half? Access our full analysis report here, it’s free for active Edge members.
- Digital Media & Content Platforms company Rumble (NASDAQ:RUM) jumped 6.8%. Is now the time to buy Rumble? Access our full analysis report here, it’s free for active Edge members.
- Hardware & Infrastructure company Xerox (NASDAQ:XRX) jumped 10.9%. Is now the time to buy Xerox? Access our full analysis report here, it’s free for active Edge members.
- Advertising & Marketing Services company Magnite (NASDAQ:MGNI) jumped 8.2%. Is now the time to buy Magnite? Access our full analysis report here, it’s free for active Edge members.
- Specialized Technology company OSI Systems (NASDAQ:OSIS) jumped 8.4%. Is now the time to buy OSI Systems? Access our full analysis report here, it’s free for active Edge members.
Zooming In On Xerox (XRX)
Xerox’s shares are extremely volatile and have had 42 moves greater than 5% over the last year. But moves this big are rare even for Xerox and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 1 day ago when the stock dropped 3.9% on the news that markets faded the Nvidia rally in the morning session, as investors remained uncertain about future rate cuts.
While the trading day began with significant enthusiasm, pushing the Dow Jones Industrial Average up more than 700 points and the Nasdaq Composite up 2.6%, momentum quickly evaporated as the session wore on. The primary catalyst for this sharp reversal was a stronger-than-expected jobs report, which reduced the implied odds of a December interest rate cut to less than 40%. This macroeconomic anxiety overshadowed stellar corporate performance. Nvidia initially surged 5% on blockbuster earnings and CEO Jensen Huang's bullish outlook on "off the charts" demand for Blackwell chips. However, the stock eventually turned negative, acting as a heavy weight that dragged the broader indices into the red. The sell-off partly reflects a deepening caution regarding high-flying tech valuations in a "higher-for-longer" rate environment.
Consequently, investors appeared to rotate capital away from volatile growth sectors and toward defensive staples, evidenced by Walmart's 6% gain following its own earnings beat. Ultimately, the market could not sustain the morning's euphoria, as traders prioritized rate realities over AI potential.
Xerox is down 68.4% since the beginning of the year, and at $2.61 per share, it is trading 73.5% below its 52-week high of $9.84 from January 2025. Investors who bought $1,000 worth of Xerox’s shares 5 years ago would now be looking at an investment worth $115.54.
While Wall Street chases Nvidia at all-time highs, an under-the-radar semiconductor supplier is dominating a critical AI component these giants can’t build without. Click here to access our full research report.