What Happened?

Shares of cabinet manufacturing company American Woodmark (NASDAQ: AMWD) jumped 3.9% in the morning session after the U.S. administration announced new tariffs on imported kitchen cabinets and furniture, a move seen as beneficial for domestic manufacturers. 

The newly announced measures included a 50% tariff on kitchen cabinets and bathroom vanities, and a 30% tariff on upholstered furniture. The stated reason for the tariffs was to protect the U.S. manufacturing industry from a large volume of foreign products entering the country. The market reacted favorably to the news for domestic producers like American Woodmark, as the tariffs were expected to make their products more competitive against foreign goods. MasterBrand, another cabinet maker that is in the process of merging with American Woodmark, also saw its stock rise following the announcement.

Is now the time to buy American Woodmark? Access our full analysis report here, it’s free.

What Is The Market Telling Us

American Woodmark’s shares are somewhat volatile and have had 10 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 9 days ago when the stock dropped 2.8% on the news that the Federal Reserve cut its benchmark interest rate by a quarter-point, while signaling one rate cut in 2026 which was lower than expected. 

The widely anticipated move put the new target range for the federal funds rate at 4% to 4.25%. Policymakers cited a weakening labor market and moderating economic growth as the primary reasons for the cut, signaling a shift in their approach to support the economy. However, they also noted that inflation "has moved up and remains somewhat elevated," creating a conflict as the committee balances its dual mandate of stable prices and full employment. Investors continued to look for clues on the pace of future rate cuts as the Fed tries to balance a slowing job market with ongoing inflation. Most Fed Committee members have indicated they expect two more cuts for the year. 

The Fed's "dot plot" also suggests a much slower pace of cuts than the market currently anticipates. With only one cut implied for 2026 compared to the three that traders priced in, this explained the market pullback after the initial spike that followed the rate cut announcement. 

As a reminder, the driver of a stock's value is the sum of its future cash flows discounted back to today. With lower interest rates, investors can apply higher valuations to their stocks. We at StockStory remain cautious, as following the crowd can lead to adverse outcomes. During times like this, it's best to own high-quality, cash-flowing companies that can weather the ups and downs of the market.

American Woodmark is down 12.1% since the beginning of the year, and at $69.22 per share, it is trading 32.8% below its 52-week high of $102.94 from November 2024. Investors who bought $1,000 worth of American Woodmark’s shares 5 years ago would now be looking at an investment worth $884.04.

Here at StockStory, we certainly understand the potential of thematic investing. Diverse winners from Microsoft (MSFT) to Alphabet (GOOG), Coca-Cola (KO) to Monster Beverage (MNST) could all have been identified as promising growth stories with a megatrend driving the growth. So, in that spirit, we’ve identified a relatively under-the-radar profitable growth stock benefiting from the rise of AI, available to you FREE via this link.