What Happened?
A number of stocks jumped in the afternoon session after President Trump cooled fears of a transatlantic trade war by calling off scheduled tariffs on European allies.
The rally followed a productive meeting in Davos with NATO Secretary General Mark Rutte, where a "framework of a future deal" regarding Greenland and the Arctic region was established. By explicitly ruling out the use of military force and suspending the 10% tariffs previously set for February 1st, the administration provided the "sigh of relief" the market desperately needed after Tuesday's sharp sell-off. Technology and semiconductor leaders like Nvidia and AMD spearheaded the recovery as investors quickly pivoted back into growth stocks. The "Sell America" trade from the prior session reversed sharply, with the Nasdaq Composite jumping 1.5% and the S&P 500 erasing its 2026 losses. This rebound was further supported by a stabilization in the bond market; as tariff-related inflation fears subsided, the 10-year Treasury yield retreated from its recent highs, creating a more favorable backdrop for equity valuations across the board.
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:
- Business Process Outsourcing & Consulting company CRA (NASDAQ: CRAI) jumped 2.8%. Is now the time to buy CRA? Access our full analysis report here, it’s free.
- Electronic Components & Manufacturing company Flex (NASDAQ: FLEX) jumped 4.1%. Is now the time to buy Flex? Access our full analysis report here, it’s free.
- IT Distribution & Solutions company ePlus (NASDAQ: PLUS) jumped 2.6%. Is now the time to buy ePlus? Access our full analysis report here, it’s free.
- IT Distribution & Solutions company TD SYNNEX (NYSE: SNX) jumped 2.7%. Is now the time to buy TD SYNNEX? Access our full analysis report here, it’s free.
Zooming In On Flex (FLEX)
Flex’s shares are very volatile and have had 20 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 biggest move we wrote about over the last year was 9 months ago when the stock gained 8.2% on the news that President Trump clarified that he had no intention of removing Federal Reserve Chair Jerome Powell, a statement that helped calm markets.
Earlier remarks had sparked fears of political interference in decision making at the central bank. With Trump walking back his earlier comments, investors likely felt more assured that monetary policy decisions will continue to be guided by data, not drama. That kept the Fed's word credible, and more importantly, gave investors a steadier compass to figure out where rates and the markets were headed next.
Adding to the positive news, the president made constructive comments on US-China trade talks, noting that the tariffs imposed on China were "very high, and it won't be that high. ... No, it won't be anywhere near that high. It'll come down substantially. But it won't be zero." Also, a key force at the center of the stock market's massive two-day rally was the frantic behavior of short sellers covering their losses. Hedge fund short sellers recently added more bearish wagers in both single stocks and securities tied to macro developments after the whipsaw early April triggered by President Donald Trump's tariff rollout and abrupt 90-day pause, according to Goldman Sachs' prime brokerage data. The increased short position in the market created an environment prone to dramatic upswings due to this artificial buying force. A short seller borrows an asset and quickly sells it; when the security decreases in price, they buy it back more cheaply to profit from the difference.
Flex is up 4.6% since the beginning of the year, and at $66.62 per share, it is trading close to its 52-week high of $72.08 from December 2025. Investors who bought $1,000 worth of Flex’s shares 5 years ago would now be looking at an investment worth $3,437.
While Wall Street chases Nvidia at all-time highs, an under-the-radar semiconductor supplier is dominating a critical AI component these giants can’t build without. Click here to access our full research report, it’s free.
