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:

• Travel and Vacation Providers company Hyatt Hotels (NYSE: H) jumped 5.9%. Is now the time to buy Hyatt Hotels? Access our full analysis report here, it’s free for active Edge members.
• Leisure Products company MasterCraft (NASDAQ: MCFT) jumped 5.7%. Is now the time to buy MasterCraft? Access our full analysis report here, it’s free for active Edge members.
• Casino Operator company MGM Resorts (NYSE: MGM) jumped 5.8%. Is now the time to buy MGM Resorts? Access our full analysis report here, it’s free for active Edge members.

Zooming In On Hyatt Hotels (H)

Hyatt Hotels’s shares are somewhat volatile and have had 10 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 biggest move we wrote about over the last year was 3 months ago when the stock gained 5.1% on the news that comments from Federal Reserve Chair Jerome Powell opened the door to potential interest rate cuts. Powell's comments at the Jackson Hole Economic Policy Symposium suggested that the central bank could begin to cut interest rates, sparking a widespread rally across Wall Street. The Dow Jones Industrial Average surged by as much as 900 points to an all-time high, with the S&P 500 and Nasdaq also seeing significant gains. For cyclical companies like Hyatt, the prospect of lower interest rates is particularly favorable as it can lead to reduced borrowing costs and stimulate consumer spending on travel and leisure, boosting investor confidence in the hospitality sector.

Hyatt Hotels is up 1.8% since the beginning of the year, and at $159.10 per share, it is trading close to its 52-week high of $166.34 from February 2025. Investors who bought $1,000 worth of Hyatt Hotels’s shares 5 years ago would now be looking at an investment worth $2,222.

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