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:
- Apparel and Accessories company Stitch Fix (NASDAQ:SFIX) jumped 2.6%. Is now the time to buy Stitch Fix? Access our full analysis report here, it’s free.
- Toys and Electronics company Bark (NYSE:BARK) jumped 2.7%. Is now the time to buy Bark? Access our full analysis report here, it’s free.
- Media company fuboTV (NYSE:FUBO) jumped 3.7%. Is now the time to buy fuboTV? Access our full analysis report here, it’s free.
- Apparel and Accessories company VF Corp (NYSE:VFC) jumped 4.2%. Is now the time to buy VF Corp? Access our full analysis report here, it’s free.
- Broadcasting company iHeartMedia (NASDAQ:IHRT) jumped 4.4%. Is now the time to buy iHeartMedia? Access our full analysis report here, it’s free.
Zooming In On iHeartMedia (IHRT)
iHeartMedia’s shares are extremely volatile and have had 75 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 8% on the news that the company announced an extension of its partnership with Bell Media to continue the expansion of its iHeartRadio brand in Canada.
The renewed agreement underscores a shared commitment to delivering audio entertainment to Canadian listeners and advertisers. Michael Biondo, iHeartMedia's President of Business Development & Strategic Partnerships, stated that future plans include expanding iHeartRadio Canada with "innovative features, exclusive content, and unique opportunities for brands to connect and engage with audiences." The extended partnership will also provide continued support for iHeartRadio-branded live music and entertainment events across the country, signaling a focus on growth and engagement in the Canadian market.
iHeartMedia is up 48.2% since the beginning of the year, and at $2.99 per share, has set a new 52-week high. Investors who bought $1,000 worth of iHeartMedia’s shares 5 years ago would now be looking at an investment worth $328.29.
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