What Happened?
A number of stocks jumped in the afternoon session after comments from a key Federal Reserve official boosted investor optimism for a potential interest rate cut.
New York Federal Reserve President John Williams, a voting member of the rate-setting committee, suggested he sees room for "further policy easing," which sent a strong signal to the markets. Following his remarks, the probability of a December rate cut, as measured by the CME FedWatch Tool, surged from 39% to 71%. Lower interest rates can stimulate the economy by making borrowing cheaper for both consumers and businesses, which often translates to increased consumer spending. This prospect is outweighing recent reports of lower consumer confidence, as investors bet that a more accommodative Fed policy will support retailers through the holiday season.
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:
- Discount Retailer company Ross Stores (NASDAQ:ROST) jumped 8.2%. Is now the time to buy Ross Stores? Access our full analysis report here, it’s free for active Edge members.
- Apparel Retailer company Zumiez (NASDAQ:ZUMZ) jumped 8%. Is now the time to buy Zumiez? Access our full analysis report here, it’s free for active Edge members.
Zooming In On Ross Stores (ROST)
Ross Stores’s shares are not very volatile and have only had 3 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 previous big move we wrote about was 25 days ago when the stock gained 3.1% on the news that an analyst at Wells Fargo raised the company's price target to $180 from $175, while keeping an Overweight rating on the shares. The analyst, Ike Boruchow, noted that the stock was one of the firm's favorite long ideas. Wells Fargo also mentioned it was raising its estimates and confidence levels as it saw a fundamental improvement in the company's story. This positive view from the analyst helped send the stock to a new 52-week high during the session.
Ross Stores is up 13.9% since the beginning of the year, and at $173.84 per share, it is trading close to its 52-week high of $174 from November 2025. Investors who bought $1,000 worth of Ross Stores’s shares 5 years ago would now be looking at an investment worth $1,607.
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