What Happened?
Shares of cloud communications provider Bandwidth (NASDAQ: BAND) jumped 4.2% in the afternoon session after the stock joined a broad market rally as comments from Federal Reserve Chair Jerome Powell hinted at potential interest rate cuts. The rally was ignited by comments from Federal Reserve Chair Jerome Powell at the Jackson Hole Economic Symposium, where he signaled that interest rate cuts could be forthcoming. This news spurred widespread optimism across Wall Street, leading to significant gains in major indices like the Dow Jones Industrial Average, S&P 500, and Nasdaq.
After the initial pop the shares cooled down to $14.71, up 4.1% from previous close.
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What Is The Market Telling Us
Bandwidth’s shares are very volatile and have had 22 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 gained 5.5% on the news that the SaaS sector continued to rally as favorable inflation data bolstered hopes for a Federal Reserve interest rate cut. This optimism was largely driven by a benign July Consumer Price Index (CPI) report, which solidified investor expectations for a Federal Reserve interest rate cut. Following the release of the inflation data, which showed a year-over-year increase of 2.7%, the probability of a rate cut in September surged to over 96%. Lower interest rates are typically beneficial for growth-oriented technology stocks, as they can reduce borrowing costs and increase the present value of future earnings. Adding to the positive sentiment was a 90-day delay in the imposition of higher tariffs on Chinese goods, which reduced trade-related uncertainty for the technology sector.
Bandwidth is down 12% since the beginning of the year, and at $14.71 per share, it is trading 32.6% below its 52-week high of $21.84 from November 2024. Investors who bought $1,000 worth of Bandwidth’s shares 5 years ago would now be looking at an investment worth $93.10.
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