What Happened?
A number of stocks jumped in the afternoon session after comments from a key Federal Reserve official bolstered hopes for an interest rate cut. New York Federal Reserve President John Williams stated he sees “room for a further adjustment” in the near term, sparking a significant market rally. Following his remarks, the probability of the central bank cutting rates at its December meeting jumped from 39% to over 73%, according to the CME FedWatch tool. This positive sentiment provided relief to markets amid concerns over high valuations, particularly in AI-related stocks.
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:
- Toys and Electronics company Mattel (NASDAQ:MAT) jumped 4.5%. Is now the time to buy Mattel? Access our full analysis report here, it’s free for active Edge members.
- Leisure Facilities company Topgolf Callaway (NYSE:MODG) jumped 4.3%. Is now the time to buy Topgolf Callaway? Access our full analysis report here, it’s free for active Edge members.
- Leisure Products company Smith & Wesson (NASDAQ:SWBI) jumped 4.3%. Is now the time to buy Smith & Wesson? Access our full analysis report here, it’s free for active Edge members.
- Real Estate Services company JLL (NYSE:JLL) jumped 4.4%. Is now the time to buy JLL? Access our full analysis report here, it’s free for active Edge members.
Zooming In On Mattel (MAT)
Mattel’s shares are not very volatile and have only had 9 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% as investors reacted positively to news of a product tie-up with streaming giant Netflix. The toy company announced it would develop a line of products, including dolls and action figures, based on a Netflix movie. This partnership was viewed as a significant opportunity for Mattel, given its smaller size compared to Netflix. The enthusiasm for the deal built on recent positive momentum, which included upbeat fourth-quarter forecasts and management's reassurance about accelerating orders from U.S. retailers.
Mattel is up 11.8% since the beginning of the year, but at $19.83 per share, it is still trading 9.6% below its 52-week high of $21.94 from February 2025. Investors who bought $1,000 worth of Mattel’s shares 5 years ago would now be looking at an investment worth $1,282.
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