What Happened?
A number of stocks jumped in the afternoon 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 yesterday 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:
- Professional Tools and Equipment company Hyster-Yale Materials Handling (NYSE: HY) jumped 5.2%. Is now the time to buy Hyster-Yale Materials Handling? Access our full analysis report here, it’s free.
- Engineered Components and Systems company Enpro (NYSE: NPO) jumped 4.8%. Is now the time to buy Enpro? Access our full analysis report here, it’s free.
- Construction Machinery company Astec (NASDAQ: ASTE) jumped 4.8%. Is now the time to buy Astec? Access our full analysis report here, it’s free.
- General Industrial Machinery company Hillenbrand (NYSE: HI) jumped 6.3%. Is now the time to buy Hillenbrand? Access our full analysis report here, it’s free.
- Energy Products and Services company Ameresco (NYSE: AMRC) jumped 7.1%. Is now the time to buy Ameresco? Access our full analysis report here, it’s free.
Zooming In On Ameresco (AMRC)
Ameresco’s shares are extremely volatile and have had 58 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 3 days ago when the stock gained 5.7% on the news that the company announced the successful completion of a $5.3 million energy infrastructure project at Ave Maria University in Florida.
The project involved modernizing the university's building infrastructure through two main initiatives. The first was the implementation of a new building automation system to integrate HVAC equipment across five buildings, which is projected to generate annual savings of approximately $200,000. The second phase involved upgrading exterior lighting to improve visibility and safety on campus.
Furthermore, Ameresco planned a third phase to increase the university's central utility plant capacity by more than 80%. This expansion, expected to be completed in 2026, will add a 3,000-ton chiller to ensure system redundancy and efficiency across 17 facilities, signaling a continued and growing partnership.
Ameresco is up 24.4% since the beginning of the year, but at $31.27 per share, it is still trading 19.4% below its 52-week high of $38.78 from September 2024. Investors who bought $1,000 worth of Ameresco’s shares 5 years ago would now be looking at an investment worth $1,031.
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