What Happened?
A number of stocks jumped in the morning session after an in-line inflation report fueled hopes for interest rate cuts and the U.S. and China agreed to extend their tariff truce. The Consumer Price Index (CPI), a key measure of inflation, came in largely as expected, holding steady at 2.7% year-over-year. This reading boosted investor optimism that the Federal Reserve will have room to lower interest rates at its next meeting, which could reduce borrowing costs for companies and consumers.
Adding to the positive sentiment, the U.S. and China extended their tariff truce for another 90 days. This development alleviates concerns about renewed trade tensions, which is a significant relief for industrial companies reliant on global supply chains and international sales. Together, these events create a favorable outlook for economic growth, benefiting cyclical sectors like industrials.
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:
- Ground Transportation company Werner (NASDAQ: WERN) jumped 5.2%. Is now the time to buy Werner? Access our full analysis report here, it’s free.
- Ground Transportation company XPO (NYSE: XPO) jumped 5.1%. Is now the time to buy XPO? Access our full analysis report here, it’s free.
- Home Construction Materials company JELD-WEN (NYSE: JELD) jumped 8%. Is now the time to buy JELD-WEN? Access our full analysis report here, it’s free.
- Construction and Maintenance Services company Tutor Perini (NYSE: TPC) jumped 3.1%. Is now the time to buy Tutor Perini? Access our full analysis report here, it’s free.
- Electrical Systems company Methode Electronics (NYSE: MEI) jumped 5.6%. Is now the time to buy Methode Electronics? Access our full analysis report here, it’s free.
Zooming In On JELD-WEN (JELD)
JELD-WEN’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 gained 25.9% on the news that the company reported second-quarter financial results that beat Wall Street's expectations for both revenue and earnings. The building products manufacturer posted a smaller-than-expected adjusted loss of $0.04 per share on revenue of $823.7 million. Although revenue dropped 16.5% compared to the same quarter last year, the figure still topped analyst forecasts. Investors also appeared encouraged by the company’s adjusted EBITDA, a measure of profitability, which at $39 million, came in 27.5% higher than estimates. Topping it off, JELD-WEN provided a full-year revenue guidance that exceeded the market's consensus estimates, signaling confidence despite the recent sales slump.
JELD-WEN is down 31% since the beginning of the year, and at $5.58 per share, it is trading 65.6% below its 52-week high of $16.22 from September 2024. Investors who bought $1,000 worth of JELD-WEN’s shares 5 years ago would now be looking at an investment worth $236.03.
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