What Happened?
A number of stocks jumped in the afternoon session after the major indices rebounded, as Fed Chair Jerome Powell delivered dovish remarks at the much-awaited Jackson Hole symposium. Powell suggested that with inflation risks moderating and unemployment remaining low, the Federal Reserve might consider a shift in its monetary policy stance, including potential interest rate cuts. This outlook eased market concerns about prolonged high interest rates and their impact on economic growth. The prospect of lower borrowing costs bolstered investor confidence, particularly in sectors that have lagged, leading to a broad rally across the market.
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:
- Specialty Equipment Distributors company Richardson Electronics (NASDAQ:RELL) jumped 3.1%. Is now the time to buy Richardson Electronics? Access our full analysis report here, it’s free.
- Vehicle Parts Distributors company GATX (NYSE:GATX) jumped 3.8%. Is now the time to buy GATX? Access our full analysis report here, it’s free.
- Automobile Manufacturing company General Motors (NYSE:GM) jumped 3.1%. Is now the time to buy General Motors? Access our full analysis report here, it’s free.
- Medical Devices & Supplies - Imaging, Diagnostics company GE HealthCare (NASDAQ:GEHC) jumped 3.2%. Is now the time to buy GE HealthCare? Access our full analysis report here, it’s free.
- Medical Devices & Supplies - Specialty company Inspire Medical Systems (NYSE:INSP) jumped 3.7%. Is now the time to buy Inspire Medical Systems? Access our full analysis report here, it’s free.
Zooming In On GATX (GATX)
GATX’s shares are not very volatile and have only had 5 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be 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 10% on the news that it struck a $4.4 billion deal to buy about 105,000 railcars from Wells Fargo through a new joint venture with Brookfield Infrastructure Partners. The deal is expected to expand GATX's North American railcar fleet, enhancing its market position and diversification. GATX is expected to initially hold 30% ownership, with the option to gain full control over time. The deal is expected to lift earnings slightly in the first full year.
GATX is up 9.3% since the beginning of the year, and at $166.20 per share, it is trading close to its 52-week high of $167.38 from January 2025. Investors who bought $1,000 worth of GATX’s shares 5 years ago would now be looking at an investment worth $2,530.
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