What Happened?
A number of stocks fell in the afternoon session after investors grew anxious as the U.S. government shutdown extended into its seventh day, creating widespread uncertainty.
The political stalemate in Washington has tangible consequences for the economy and markets. A key impact is the delay in the release of crucial economic data, including the September jobs report, leaving the Federal Reserve with less information to guide its policy decisions. The shutdown is also causing direct disruptions, with staffing shortages at the Federal Aviation Administration (FAA) leading to widespread delays at major airports. This combination of economic ambiguity and real-world service interruptions has dampened investor confidence across multiple sectors.
Adding to the unease, Chief Economist at Moody's Analytics, Mark Zandi, warned that 22 states are already showing clear signs of a recession, placing the broader U.S. economy in a precarious position. Also, the latest Survey of Consumer Expectations from the New York Fed revealed that households' short-term inflation expectations are rising, while their outlook on the labor market is deteriorating. Consumers expressed greater concern about potential job losses and expect lower earnings growth, factors that directly impact discretionary spending.
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:
- Electrical Systems company Thermon (NYSE: THR) fell 3.5%. Is now the time to buy Thermon? Access our full analysis report here, it’s free for active Edge members.
- Electronic Components company Novanta (NASDAQ: NOVT) fell 3.1%. Is now the time to buy Novanta? Access our full analysis report here, it’s free for active Edge members.
- Aerospace company Curtiss-Wright (NYSE: CW) fell 2.6%. Is now the time to buy Curtiss-Wright? Access our full analysis report here, it’s free for active Edge members.
- General Industrial Machinery company Hillenbrand (NYSE: HI) fell 2.8%. Is now the time to buy Hillenbrand? Access our full analysis report here, it’s free for active Edge members.
- Gas and Liquid Handling company Helios (NYSE: HLIO) fell 3.7%. Is now the time to buy Helios? Access our full analysis report here, it’s free for active Edge members.
Zooming In On Helios (HLIO)
Helios’s shares are somewhat volatile and have had 14 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 19 days ago when the stock gained 4.1% on the news that 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 the previous day 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.
Helios is up 13.3% since the beginning of the year, but at $50.25 per share, it is still trading 10.7% below its 52-week high of $56.28 from November 2024. Investors who bought $1,000 worth of Helios’s shares 5 years ago would now be looking at an investment worth $1,281.
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