Powell speaks, Market listens, Stocks rally !
Right now in the US, if there is anyone who is capable of restoring calm to the market, it is definitely not US president nor the Treasury Secretary, Scott Bessent but Fed chair - Jerome Powell. (see below)
It is evident that when Mr Powell started speaking at the post FOMC press conference at 2pm US EDT, the S&P 500 index began to recover. (see above)
In fact, stocks across all 3 indexes rallied on Wednesday; despite the Fed’s decision to keep interest rate status quo as predicted by CME Fedwatch tool and Wall Street.
The S&P 500 clawed back more of the rout since late February 2025; one that took the benchmark briefly into correction territory.
By market closing time:
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DJIA: +0.92% (+383.32 to 41,964.63).
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S&P 500: +1.08% (+60.63 to 5,675.29).
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Nasdaq: +1.41% (+246.67 to 17,750.79).
What Exactly Did The Chairman Say?
Mr Powell addressed issues & concerns head on, instead of beating around the bush like the president and treasury secretary :
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He acknowledged there are signs of weakness in (a) consumer spending and (b) consumer sentiment but said the economy is “strong overall.”
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He iterated again that FOMC is attentive to the risks to both sides of its dual mandate, that are (1) maximum employment and (2) price stability.
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To that end, Mr Powell has remarked that US labour market conditions are solid, and inflation has moved closer to their 2% longer-run goal, though it remains somewhat elevated.
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More important - he soothed an anxious market that any effect from tariffs on inflation would likely be only short term.
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US central bank is still on target to deliver two quarter-percentage-point (-0.25%) rate cuts by end 2025 (matching the Fed’s December 2024 dot-plot).
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This is mainly due to (i) weakened economic growth, (ii) offsetting higher inflation, and what Powell called the "inertia" of not knowing what else to do given the muddled outlook.
10 Years Treasury.
On Wednesday, the 10-year Treasury yield dropped to 4.24% from 4.31%, just before the Fed announced its decision. (see above)
The Fed announced it will be paring the monthly reductions of its trove of Treasurys from April 2025.
Many analysts are certain that such a move will keep longer-term yields lower than they would otherwise be.
Finally, a lower Treasury yields in the bond market is a boost for US equities.
Time to load up on BBAI ?
$BigBear.ai Holdings(BBAI)$ my fave AI-stock has experienced a dramatic reversal of fortune after its 25 Feb 2025 peak, driven by multiple catalysts.
The stock has fallen to $3.11 from $9.78, a massive -68.3% by 19 Mar 2025, with accelerated declines in recent days.
Catalysts behind the fall.
(1) Disappointing Q4 2024.
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On 18 Mar 2025, BBAI released it 2024 final quarter earnings.
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Wider-than-expected net loss of $108 million (vs. -$21.3 million year-ago loss).
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Revenue was $43.8 million, missed estimates by 19.1%, despite a +8% YoY increase.
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Negative adjusted EBITDA projected for 2025 raised profitability concerns.
(2) Weak 2025 Guidance
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Revenue forecast of $160 –$180 million fell short of consensus ($194M).
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Management cited delays in federal contract execution and competitive pressures.
(3) Defense Budget Uncertainty
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US Dept of Defense plans for -8% annual budget cuts over 5 years sparked sector-wide fears.
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BBAI derives significant revenue from defense contracts, amplifying perceived risk.
(4) Leadership and Strategic Concerns
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New CEO’s long-term growth plans caused investor skepticism amid execution risks.
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Northland Securities downgraded BBAI to Market Perform due to inconsistent growth.
(5) AI Sector Volatility
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Pre $NVIDIA(NVDA)$ Q4 2024 earnings jitters on 26 Feb 2025, pressured growth stocks like BBAI.
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Regulatory scrutiny over AI applications intensified selling pressure.
(6) 10-K Filing Delay.
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On 18 Mar 2024, BigBear.ai (BBAI) stock fell by -13.4%.
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This is because BBAI will delay its 2024 annual 10-K report.
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Delay is due to a re-evaluation of accounting for 2026 convertible notes.
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BigBear.ai and auditors, Grant Thornton LLP, changed accounting treatment of the embedded conversion option.
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Financial restatements required for 2022, 2023 annual reports and 2023, 2024 quarterly reports.
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Investors are concerned about accounting practices and financial uncertainty.
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Market volatility exacerbated investor reaction.
Comeback Soon ?
If BBAI could overcome its near-term challenges (see below), recovery could be insight.
Challenges
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Profitability concerns persist with negative EBITDA projections.
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Government spending delays and competition threaten revenue growth.
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Market sentiment remains bearish (-24.33% YTD decline vs. sector’s +11%).
Potential Catalysts
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Government Contracts: Recent $13.2M US Dept of Defense contract and AI prototyping work could stabilize revenue. (see below)
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AI Adoption: Long-term defense/AI tailwinds may offset short-term risks.
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Execution: New CEO’s strategy to streamline operations and expand commercial partnerships.
Outlook
A near-term rebound remains unsustainable and unlikely:
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Without concrete improvements in margins.
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New contract wins.
Analysts project an average 2025 price of $7.33 per share (+236% upside), but volatility will persist.
Pay attention to BBAI’s Q1 2025 earnings (13 May 2025) for signs of turnaround execution. (see above)
I still have strong conviction about BBAI’s mid to long-term growth. Current turbulence is noise to be aware but keep in perspective. Agree BigBear-fans ?
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Do you think US economy slipping into recession or stagflation instead as touted by $Goldman Sachs(GS)$ ?
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Do you think - BBAI will be able to regain some lost grounds in the near term ?
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