What Happened?
A number of stocks jumped in the afternoon session after comments from a key Federal Reserve official bolstered hopes for an interest rate cut. New York Federal Reserve President John Williams stated he sees “room for a further adjustment” in the near term, sparking a significant market rally. Following his remarks, the probability of the central bank cutting rates at its December meeting jumped from 39% to over 73%, according to the CME FedWatch tool. This positive sentiment provided relief to markets amid concerns over high valuations, particularly in AI-related stocks.
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:
- Apparel and Accessories company Stitch Fix (NASDAQ: SFIX) jumped 4.8%. Is now the time to buy Stitch Fix? Access our full analysis report here, it’s free for active Edge members.
- Travel and Vacation Providers company Delta (NYSE: DAL) jumped 4.6%. Is now the time to buy Delta? Access our full analysis report here, it’s free for active Edge members.
- Specialized Consumer Services company Pool (NASDAQ: POOL) jumped 4.8%. Is now the time to buy Pool? Access our full analysis report here, it’s free for active Edge members.
- Travel and Vacation Providers company Marriott (NASDAQ: MAR) jumped 4.8%. Is now the time to buy Marriott? Access our full analysis report here, it’s free for active Edge members.
- Specialized Consumer Services company Frontdoor (NASDAQ: FTDR) jumped 4.8%. Is now the time to buy Frontdoor? Access our full analysis report here, it’s free for active Edge members.
Zooming In On Marriott (MAR)
Marriott’s shares are not very volatile and have only had 4 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 9 months ago when the stock dropped 5.1% on the news that the company reported disappointing fourth-quarter results: While full-year EPS fell short of expectations, fourth-quarter revenue and EPS slightly exceeded estimates. However, full-year guidance implied adjusted EPS of $9.82 to $10.19, suggesting moderate growth, and RevPAR (sales generated by each available room - a key performance indicator) growth is expected to decelerate to 2%-4%, which is even more worrisome. Overall, this was a weak quarter.
Marriott is up 7.8% since the beginning of the year, and at $295.88 per share, it is trading close to its 52-week high of $304.45 from February 2025. Investors who bought $1,000 worth of Marriott’s shares 5 years ago would now be looking at an investment worth $2,404.
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