What Happened?

A number of stocks jumped in the afternoon session after President Donald Trump eased concerns over escalating trade tensions with China, calming markets rattled by his earlier tariff threats. 

U.S. stocks rose sharply, with Nasdaq-100 jumping nearly 2%, following a post on Truth Social where Trump suggested the trade conflict would not worsen. This shift in tone provided significant relief to investors, who had driven a sharp sell-off the previous Friday due to fears of higher tariffs. Technology companies with significant international supply chains and sales, such as AMD and Nvidia, led the market rally, with their shares climbing 4.2% and 3.4%, respectively. The broader market indexes, including the S&P 500 and the Dow Jones Industrial Average, also saw substantial gains, reflecting widespread optimism that a potentially damaging trade war might be averted.

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:

• Data Infrastructure company C3.ai (NYSE: AI) jumped 6.4%. Is now the time to buy C3.ai? Access our full analysis report here, it’s free for active Edge members.
• Data Storage company DigitalOcean (NYSE: DOCN) jumped 6.3%. Is now the time to buy DigitalOcean? Access our full analysis report here, it’s free for active Edge members.

Zooming In On C3.ai (AI)

C3.ai’s shares are extremely volatile and have had 41 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 dropped 4.2% on the news that President Trump threatened to increase import taxes on Chinese goods, reigniting trade war fears. The threat was in response to China's move to restrict its exports of rare earth minerals, which are critical to high-tech manufacturing in the U.S. The unexpected announcement shattered a monthslong calm on Wall Street, sending major indices tumbling. The S&P 500 dropped around 1.3%, while the tech-heavy Nasdaq Composite fell 2.7%. Investors reacted by selling off stocks, particularly in the technology and retail sectors, amid concerns that escalating trade tensions could disrupt global supply chains and increase costs for companies.

C3.ai is down 44.3% since the beginning of the year, and at $19.30 per share, it is trading 55.1% below its 52-week high of $42.94 from December 2024. Investors who bought $1,000 worth of C3.ai’s shares at the IPO in December 2020 would now be looking at an investment worth $208.67.

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