What Happened?
A number of stocks jumped in the afternoon session after conciliatory remarks from President Trump regarding the trade conflict with Beijing helped stabilize markets. Investor anxiety on Wall Street eased after Trump called his previous threats of 100% tariffs on Chinese goods "unsustainable." This shift in tone provided a significant boost to overall market sentiment, leading to a broad-based rally in stocks. The easing of trade war fears created a more favorable environment for equities across various sectors, including financial stocks, which were already rebounding from recent credit-related concerns. The positive market-wide momentum contributed to the recovery seen in regional bank shares.
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:
- Investment Banking & Brokerage company Jefferies (NYSE: JEF) jumped 6.6%. Is now the time to buy Jefferies? Access our full analysis report here, it’s free for active Edge members.
- Auto Loan company Credit Acceptance (NASDAQ: CACC) jumped 3.1%. Is now the time to buy Credit Acceptance? Access our full analysis report here, it’s free for active Edge members.
- Credit Card company Capital One (NYSE: COF) jumped 4.2%. Is now the time to buy Capital One? Access our full analysis report here, it’s free for active Edge members.
- Credit Card company Bread Financial (NYSE: BFH) jumped 2.6%. Is now the time to buy Bread Financial? Access our full analysis report here, it’s free for active Edge members.
- Diversified Financial Services company Corpay (NYSE: CPAY) jumped 2.7%. Is now the time to buy Corpay? Access our full analysis report here, it’s free for active Edge members.
Zooming In On Jefferies (JEF)
Jefferies’s shares are quite volatile and have had 16 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 1 day ago when the stock dropped 5.6% as multiple shareholder rights law firms announced investigations into the company for potential violations of securities laws. The probes focused on whether Jefferies issued misleading statements or failed to disclose key information to investors regarding its significant financial exposure to the recently collapsed auto-parts maker, First Brands Group. Previously, on October 8, the company had admitted to approximately $715 million in exposure to First Brands' receivables, which represented about 25% of the trade finance portfolio of its Point Bonita subsidiary. That news caused the stock to fall by about 8%. The continued pressure on the stock came as the company's deep ties to First Brands were expected to draw questions during its annual investor day.
Jefferies is down 33.9% since the beginning of the year, and at $52.24 per share, it is trading 36.1% below its 52-week high of $81.75 from December 2024. Investors who bought $1,000 worth of Jefferies’s shares 5 years ago would now be looking at an investment worth $2,636.
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