What Happened?
A number of stocks jumped in the afternoon session after investors grew more optimistic about a potential Federal Reserve interest rate cut in December.
The positive sentiment was fueled by comments from New York Fed President John Williams, a voting member of the rate-setting Federal Open Market Committee, who stated the central bank could cut rates "in the near term" without jeopardizing its inflation targets. Following his remarks, market expectations for a rate cut in December shifted significantly. According to the CME FedWatch Tool, the probability of a December rate reduction surged from a 37% chance earlier in the day to 70%. While lower rates can compress bank profit margins, investors often view them as a catalyst for broader economic activity, potentially boosting loan demand and reducing the risk of defaults.
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:
- Custody Bank company T. Rowe Price (NASDAQ:TROW) jumped 3.2%. Is now the time to buy T. Rowe Price? Access our full analysis report here, it’s free for active Edge members.
- Diversified Financial Services company NCR Atleos (NYSE:NATL) jumped 3.1%. Is now the time to buy NCR Atleos? Access our full analysis report here, it’s free for active Edge members.
- Credit Card company American Express (NYSE:AXP) jumped 3.1%. Is now the time to buy American Express? Access our full analysis report here, it’s free for active Edge members.
- Asset Management company Blackstone (NYSE:BX) jumped 3.1%. Is now the time to buy Blackstone? Access our full analysis report here, it’s free for active Edge members.
Zooming In On T. Rowe Price (TROW)
T. Rowe Price’s shares are not very volatile and have only had 3 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 3 months ago when the stock gained 5.6% on the news that the company announced a strategic collaboration with Goldman Sachs that includes a planned investment of up to $1 billion from the financial giant. As part of the agreement, Goldman Sachs intends to purchase T. Rowe Price's common stock through open-market transactions, aiming to acquire a stake of up to 3.5%. The partnership is designed to leverage the strengths of both firms to create a range of diversified investment solutions for retirement and wealth management clients. The collaboration will focus on developing products that combine public and private market offerings. The companies also plan to launch co-branded target-date investment strategies in mid-2026 that will incorporate private market assets.
T. Rowe Price is down 11.6% since the beginning of the year, and at $100.27 per share, it is trading 19.6% below its 52-week high of $124.69 from December 2024. Investors who bought $1,000 worth of T. Rowe Price’s shares 5 years ago would now be looking at an investment worth $719.42.
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