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:

• Credit Card company Bread Financial (NYSE: BFH) jumped 5.3%. Is now the time to buy Bread Financial? Access our full analysis report here, it’s free for active Edge members.
• Auto Loan company Credit Acceptance (NASDAQ: CACC) jumped 4.9%. Is now the time to buy Credit Acceptance? Access our full analysis report here, it’s free for active Edge members.
• Diversified Financial Services company NerdWallet (NASDAQ: NRDS) jumped 5.1%. Is now the time to buy NerdWallet? Access our full analysis report here, it’s free for active Edge members.
• Investment Banking & Brokerage company Perella Weinberg (NASDAQ: PWP) jumped 5.6%. Is now the time to buy Perella Weinberg? Access our full analysis report here, it’s free for active Edge members.
• Diversified Financial Services company Donnelley Financial Solutions (NYSE: DFIN) jumped 4.9%. Is now the time to buy Donnelley Financial Solutions? Access our full analysis report here, it’s free for active Edge members.

Zooming In On Perella Weinberg (PWP)

Perella Weinberg’s shares are very volatile and have had 22 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 11 days ago when the stock gained 7.9% on the news that the stock's positive momentum continued as investors focused on the company's positive long-term growth prospects, which overshadowed a recent analyst price target reduction and weak quarterly revenue. During a recent earnings call, the company revealed a record pipeline and a record number of active engagements. Management also highlighted that its European business had grown over 50% from the previous year. These positive forward-looking statements seemed to outweigh a report from a few days prior that showed a 41% year-over-year drop in third-quarter revenue. The company also disclosed it had made significant investments in its future, hiring 25 senior bankers and completing the acquisition of Devon Park. Despite an analyst from Keefe, Bruyette & Woods lowering their price target on the stock, the market's reaction suggested investors were more interested in the company's strategic moves aimed at future growth.

Perella Weinberg is down 24.4% since the beginning of the year, and at $17.81 per share, it is trading 32.6% below its 52-week high of $26.41 from January 2025. Investors who bought $1,000 worth of Perella Weinberg’s shares 5 years ago would now be looking at an investment worth $1,755.

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