What Happened?
A number of stocks fell in the afternoon session after Federal Reserve Chair Jerome Powell signaled a cautious stance on future monetary policy decisions during a speech in Chicago, emphasizing that trade tariffs could add upward pressure to inflation in the short term and complicate the Fed's efforts to stabilize the economy. He warned that such trade measures are "likely to move us further away from our goals," referring to the Fed's dual mandate of price stability and maximum employment.
The comments did little to improve sentiment, as major indices were already in the negative territory in the morning session after Nvidia announced it might be unable to sell some high-end chips (including the H20 chips) to China due to export controls and requirements from the Trump administration. As a result, the company planned to take a $5.5 billion charge due to inventory writedowns and canceled sales. Adding to the sector's pressure, chip tool maker ASML posted weak bookings (a key demand indicator) which fell below Wall Street's expectations, noting that tariffs had made the industry's outlook more uncertain.
Taken together, these updates likely fueled investor anxiety, amplifying concerns about global trade tensions, tech sector vulnerability, and the Fed's limited room to maneuver in an increasingly uncertain macro environment.
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:
- Apparel and Accessories company Oxford Industries (NYSE: OXM) fell 5.6%. Is now the time to buy Oxford Industries? Access our full analysis report here, it’s free.
- Leisure Products company YETI (NYSE: YETI) fell 5.6%. Is now the time to buy YETI? Access our full analysis report here, it’s free.
- Media company Warner Bros. Discovery (NASDAQ: WBD) fell 5.6%. Is now the time to buy Warner Bros. Discovery? Access our full analysis report here, it’s free.
- Specialized Consumer Services company Matthews (NASDAQ: MATW) fell 5.9%. Is now the time to buy Matthews? Access our full analysis report here, it’s free.
- Ground Transportation company Saia (NASDAQ: SAIA) fell 5.7%. Is now the time to buy Saia? Access our full analysis report here, it’s free.
Zooming In On Matthews (MATW)
Matthews’s shares are quite volatile and have had 19 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 biggest move we wrote about over the last year was 3 months ago when the stock gained 14.4% on the news that the company announced the sale of its stake in SGK Brand Solutions (a branding and content business) to a newly formed entity created by affiliates of SGS. The deal was projected to generate up to $350 million for Matthews, improving its cash reserves and equipping the company with more capital to fuel new growth initiatives.
Matthews is down 26.6% since the beginning of the year, and at $19.83 per share, it is trading 37.1% below its 52-week high of $31.54 from November 2024. Investors who bought $1,000 worth of Matthews’s shares 5 years ago would now be looking at an investment worth $921.90.
Today’s young investors won’t have read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next.
