What Happened?
A number of stocks jumped in the morning 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 the previous day 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:
- Wireless, Cable and Satellite company Altice (NYSE:ATUS) jumped 6.5%. Is now the time to buy Altice? Access our full analysis report here, it’s free.
- Travel and Vacation Providers company Sabre (NASDAQ:SABR) jumped 4.6%. Is now the time to buy Sabre? Access our full analysis report here, it’s free.
- Toys and Electronics company Funko (NASDAQ:FNKO) jumped 3.3%. Is now the time to buy Funko? Access our full analysis report here, it’s free.
- Specialized Consumer Services company 1-800-FLOWERS (NASDAQ:FLWS) jumped 9.5%. Is now the time to buy 1-800-FLOWERS? Access our full analysis report here, it’s free.
Zooming In On 1-800-FLOWERS (FLWS)
1-800-FLOWERS’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 10 days ago when the stock gained 0.3% after the stock continued to decline as the company's fourth-quarter earnings report revealed a wider-than-expected loss and shrinking profit margins. Although revenue topped estimates, the company's profitability struggles took center stage. The non-GAAP loss per share was $0.69, significantly worse than the 51-cent loss analysts had anticipated. Furthermore, the adjusted EBITDA loss more than doubled compared to the same period last year. Sales declines were seen across key divisions, with the main floral and gift segment down nearly 9% and gourmet foods falling over 3%. The core of the issue was a significant 290 basis point drop in gross margin, a metric that reflects the profitability of its sales. This compression in margins highlights the financial challenges the company faces despite bringing in sales.
1-800-FLOWERS is down 26.5% since the beginning of the year, and at $5.74 per share, it is trading 36.8% below its 52-week high of $9.09 from February 2025. Investors who bought $1,000 worth of 1-800-FLOWERS’s shares 5 years ago would now be looking at an investment worth $249.25.
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