What Happened?

A number of stocks jumped in the afternoon session after the major indices rebounded, as Fed Chair Jerome Powell delivered dovish remarks at the much-awaited Jackson Hole symposium. Powell suggested that with inflation risks moderating and unemployment remaining low, the Federal Reserve might consider a shift in its monetary policy stance, including potential interest rate cuts. This outlook eased market concerns about prolonged high interest rates and their impact on economic growth. The prospect of lower borrowing costs bolstered investor confidence, particularly in sectors that have lagged, leading to a broad rally across the market.

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:

• Sales Software company HubSpot (NYSE: HUBS) jumped 3.2%. Is now the time to buy HubSpot? Access our full analysis report here, it’s free.
• Project Management Software company monday.com (NASDAQ: MNDY) jumped 3.1%. Is now the time to buy monday.com? Access our full analysis report here, it’s free.
• Automation Software company Pegasystems (NASDAQ: PEGA) jumped 3.4%. Is now the time to buy Pegasystems? Access our full analysis report here, it’s free.
• Home Improvement Retailer company Lowe's (NYSE: LOW) jumped 3.5%. Is now the time to buy Lowe's? Access our full analysis report here, it’s free.
• Grocery Store company Grocery Outlet (NASDAQ: GO) jumped 3.4%. Is now the time to buy Grocery Outlet? Access our full analysis report here, it’s free.

Zooming In On Lowe's (LOW)

Lowe’s shares are not very volatile and have only had 2 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 previous big move we wrote about was 9 days ago when the stock gained 5.2% on the news that markets continued to rally amid growing investor optimism for a Federal Reserve interest rate cut in September. This optimism was spurred by a recent Consumer Price Index (CPI) report that did not show runaway inflation, increasing the perceived probability of a rate cut to over 90%. Lower interest rates are generally seen as a positive for the economy as they reduce borrowing costs for consumers, which can stimulate spending on non-essential goods. Consequently, investors bid up shares in the apparel, home furnishings, and automotive retail industries in anticipation of stronger consumer demand.

Lowe's is up 7.2% since the beginning of the year, and at $264.76 per share, it is trading close to its 52-week high of $284.05 from October 2024. Investors who bought $1,000 worth of Lowe’s shares 5 years ago would now be looking at an investment worth $1,598.

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