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:

• Immuno-Oncology company Natera (NASDAQ: NTRA) jumped 3.2%. Is now the time to buy Natera? Access our full analysis report here, it’s free for active Edge members.
• Generic Pharmaceuticals company Amneal (NASDAQ: AMRX) jumped 3%. Is now the time to buy Amneal? Access our full analysis report here, it’s free for active Edge members.
• Senior Health, Home Health & Hospice company Chemed (NYSE: CHE) jumped 3.2%. Is now the time to buy Chemed? Access our full analysis report here, it’s free for active Edge members.
• Senior Health, Home Health & Hospice company The Pennant Group (NASDAQ: PNTG) jumped 3%. Is now the time to buy The Pennant Group? Access our full analysis report here, it’s free for active Edge members.
• Hospital Chains company HCA Healthcare (NYSE: HCA) jumped 3.3%. Is now the time to buy HCA Healthcare? Access our full analysis report here, it’s free for active Edge members.

Zooming In On HCA Healthcare (HCA)

HCA Healthcare’s shares are not very volatile and have only had 3 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 2 months ago when the stock dropped 4.4% on the news that markets pulled back, reversing early gains, as investor sentiment remained cautious despite a softer-than-expected inflation reading. Stocks rose in the morning session after an unexpected drop in the Producer Price Index (PPI) for August signaled easing inflation and raised expectations for a potential Federal Reserve interest rate cut. The U.S. Bureau of Labor Statistics reported that the PPI, which measures wholesale prices, edged down 0.1% the previous month, contrary to analyst expectations for a 0.3% rise. This data gives the Federal Reserve more flexibility to consider lowering interest rates to stimulate the economy.

HCA Healthcare is up 65% since the beginning of the year, and at $491.23 per share, has set a new 52-week high. Investors who bought $1,000 worth of HCA Healthcare’s shares 5 years ago would now be looking at an investment worth $3,288.

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