What Happened?
A number of stocks fell in the afternoon session after markets faded the Nvidia rally in the morning session, as investors remained uncertain about future rate cuts.
While the trading day began with significant enthusiasm, pushing the Dow Jones Industrial Average up more than 700 points and the Nasdaq Composite up 2.6%, momentum quickly evaporated as the session wore on. The primary catalyst for this sharp reversal was a stronger-than-expected jobs report, which reduced the implied odds of a December interest rate cut to less than 40%. This macroeconomic anxiety overshadowed stellar corporate performance. Nvidia initially surged 5% on blockbuster earnings and CEO Jensen Huang's bullish outlook on "off the charts" demand for Blackwell chips. However, the stock eventually turned negative, acting as a heavy weight that dragged the broader indices into the red. The sell-off partly reflects a deepening caution regarding high-flying tech valuations in a "higher-for-longer" rate environment.
Consequently, investors appeared to rotate capital away from volatile growth sectors and toward defensive staples, evidenced by Walmart's 6% gain following its own earnings beat. Ultimately, the market could not sustain the morning's euphoria, as traders prioritized rate realities over AI potential.
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:
- Custom Parts Manufacturing company 3D Systems (NYSE:DDD) fell 4.5%. Is now the time to buy 3D Systems? Access our full analysis report here, it’s free for active Edge members.
- Aerospace company Redwire (NYSE:RDW) fell 6.7%. Is now the time to buy Redwire? Access our full analysis report here, it’s free for active Edge members.
- Construction and Maintenance Services company Construction Partners (NASDAQ:ROAD) fell 3.6%. Is now the time to buy Construction Partners? Access our full analysis report here, it’s free for active Edge members.
- Electrical Systems company Methode Electronics (NYSE:MEI) fell 3%. Is now the time to buy Methode Electronics? Access our full analysis report here, it’s free for active Edge members.
- Specialty Equipment Distributors company Alta (NYSE:ALTG) fell 3.3%. Is now the time to buy Alta? Access our full analysis report here, it’s free for active Edge members.
Zooming In On Redwire (RDW)
Redwire’s shares are extremely volatile and have had 96 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 1 day ago when the stock gained 2% on the news that the company announced it was awarded a $44 million contract from the Defense Advanced Research Projects Agency (DARPA). The phase 2 contract provided funding to advance DARPA's Otter Very Low Earth Orbit (VLEO) mission. The funds were allocated to complete the manufacturing and delivery of what was described as the world's first "air-breathing" spacecraft. Redwire utilized its SabreSat platform for the project, which aimed to advance next-generation orbital capabilities. The contract award highlighted the company's role in developing innovative space and defense technology solutions.
Redwire is down 70.3% since the beginning of the year, and at $5.06 per share, it is trading 80.3% below its 52-week high of $25.66 from February 2025. Investors who bought $1,000 worth of Redwire’s shares at the IPO in January 2021 would now be looking at an investment worth $485.69.
While Wall Street chases Nvidia at all-time highs, an under-the-radar semiconductor supplier is dominating a critical AI component these giants can’t build without. Click here to access our full research report.