What Happened?
A number of stocks jumped in the afternoon session after the major indices rebounded, as Fed Chair Jerome Powell delivered dovish remarks at the much-awaited Jackson Hole symposium. Powell suggested that with inflation risks moderating and unemployment remaining low, the Federal Reserve might consider a shift in its monetary policy stance, including potential interest rate cuts. This outlook eased market concerns about prolonged high interest rates and their impact on economic growth. The prospect of lower borrowing costs bolstered investor confidence, particularly in sectors that have lagged, leading to a broad rally across the market.
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:
- Specialty Finance company PROG (NYSE: PRG) jumped 6.3%. Is now the time to buy PROG? Access our full analysis report here, it’s free.
- Thrifts & Mortgage Finance company Walker & Dunlop (NYSE: WD) jumped 6.7%. Is now the time to buy Walker & Dunlop? Access our full analysis report here, it’s free.
- Thrifts & Mortgage Finance company Rocket Companies (NYSE: RKT) jumped 11%. Is now the time to buy Rocket Companies? Access our full analysis report here, it’s free.
- Thrifts & Mortgage Finance company Ready Capital (NYSE: RC) jumped 7.7%. Is now the time to buy Ready Capital? Access our full analysis report here, it’s free.
- Thrifts & Mortgage Finance company PennyMac Financial Services (NYSE: PFSI) jumped 6.4%. Is now the time to buy PennyMac Financial Services? Access our full analysis report here, it’s free.
Zooming In On Rocket Companies (RKT)
Rocket Companies’s shares are extremely volatile and have had 37 moves greater than 5% over the last year. But moves this big are rare even for Rocket Companies and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 1 day ago when the stock dropped 3.2% on the news that markets continued to decline, as investors grew cautious ahead of a key speech by Federal Reserve Chair Jerome Powell. The move came as U.S. equity markets recorded a fifth consecutive day of losses for major indexes like the S&P 500, with technology stocks experiencing the largest declines. Investors have grown wary that the sharp rally in the tech sector since April may have advanced too far. The market-wide caution is largely driven by the upcoming Jackson Hole symposium, a meeting of central bankers, where traders are anxiously awaiting Fed Chair Powell's speech on Friday for guidance on the future path of interest rates.
Rocket Companies is up 78.4% since the beginning of the year, and at $19.35 per share, it is trading close to its 52-week high of $20.81 from August 2024. Investors who bought $1,000 worth of Rocket Companies’s shares 5 years ago would now be looking at an investment worth $664.75.
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