What Happened?
Shares of private corrections company GEO Group (NYSE: GEO) fell 3.7% in the afternoon session after a media report detailed allegations of abuse and neglect at an immigrant detention center run by the private corrections company.
A Guardian investigation into the Alexandria, Louisiana, facility described it as a “black hole” and a hub of the Trump administration's deportation machine, revealing a pattern of alleged due process violations, neglect, and abuse. This negative report compounded existing concerns about the company's financial health.
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What Is The Market Telling Us
GEO Group’s shares are extremely volatile and have had 30 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 about 23 hours ago when the stock gained 7.1% on the news that the Consumer Price Index (CPI) report bolstered expectations for a Federal Reserve interest rate cut despite showing persistent inflation.
The August CPI data, a key measure of inflation, showed prices rose 2.9% annually, slightly more than economists expected. While inflation remains above the Federal Reserve's 2% target, investors were focusing on other signs of a cooling economy, particularly a weakening labor market. As a result, the market widely anticipated that the Fed would cut interest rates at its September meeting to support the economy. Investors priced in multiple rate cuts by year-end, which boosted market sentiment and sent Treasury yields lower.
GEO Group is down 21.9% since the beginning of the year, and at $22.11 per share, it is trading 37.5% below its 52-week high of $35.35 from January 2025. Investors who bought $1,000 worth of GEO Group’s shares 5 years ago would now be looking at an investment worth $1,967.
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