In This Article:
What Happened?
A number of stocks jumped in the morning session after President Trump clarified that he had no intention of removing Federal Reserve Chair Jerome Powell, a statement that helped calm markets. Earlier remarks had sparked fears of political interference in decision-making at the central bank. With Trump walking back his earlier comments, investors likely felt more assured that monetary policy decisions would continue to be guided by data, not drama. That kept the Fed's word credible, and more importantly, gave investors a steadier compass to figure out where rates and the markets were headed next.
Adding to the positive news, the president made constructive comments on US-China trade talks, noting that the tariffs imposed on China were "very high, and it won't be that high. ... No, it won't be anywhere near that high. It'll come down substantially. But it won't be zero."
Also, a key force at the center of the stock market's massive two-day rally was the frantic behavior of short sellers covering their losses. Hedge fund short sellers recently added more bearish wagers in both single stocks and securities tied to macro developments after the whipsaw early April triggered by President Donald Trump's tariff rollout and abrupt 90-day pause, according to Goldman Sachs' prime brokerage data. The increased short position in the market created an environment prone to dramatic upswings due to this artificial buying force.
A short seller borrows an asset and quickly sells it; when the security decreases in price, they buy it back more cheaply to profit from the difference.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, following stocks were impacted:
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Content Delivery company Cloudflare (NYSE:NET) jumped 8.8%. Is now the time to buy Cloudflare? Access our full analysis report here, it’s free.
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E-commerce Software company Shopify (NASDAQ:SHOP) jumped 10.6%. Is now the time to buy Shopify? Access our full analysis report here, it’s free.
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Project Management Software company Monday.com (NASDAQ:MNDY) jumped 7.8%. Is now the time to buy Monday.com? Access our full analysis report here, it’s free.
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Processors and Graphics Chips company Broadcom (NASDAQ:AVGO) jumped 6.2%. Is now the time to buy Broadcom? Access our full analysis report here, it’s free.
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Semiconductor Manufacturing company Marvell Technology (NASDAQ:MRVL) jumped 10.4%. Is now the time to buy Marvell Technology? Access our full analysis report here, it’s free.