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 Synchrony Financial (NYSE: SYF) jumped 3.9%. Is now the time to buy Synchrony Financial? Access our full analysis report here, it’s free for active Edge members.
• Diversified Financial Services company Corpay (NYSE: CPAY) jumped 3.9%. Is now the time to buy Corpay? Access our full analysis report here, it’s free for active Edge members.
• Personal Loan company LendingClub (NYSE: LC) jumped 3.8%. Is now the time to buy LendingClub? Access our full analysis report here, it’s free for active Edge members.

Zooming In On Corpay (CPAY)

Corpay’s shares are not very volatile and have only had 8 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 previous big move we wrote about was 23 days ago when the stock dropped 5.3% on the news that peer company Fiserv reported mixed third-quarter results that showed weakness in a key business area. Fiserv, a company in the same financial technology space, posted a 3% decline in revenue for its Financial Solutions segment. While the company's overall revenue grew by a slight 1%, the drop in this specific division created concern among investors about the health of the broader industry. The negative sentiment appeared to overshadow positive news for Corpay, as a London court approved its acquisition of Alpha Group. The market's reaction suggested that worries about sector-wide headwinds, sparked by Fiserv's report, outweighed the company-specific good news.

Corpay is down 15.1% since the beginning of the year, and at $288.75 per share, it is trading 25.9% below its 52-week high of $389.55 from February 2025. Investors who bought $1,000 worth of Corpay’s shares 5 years ago would now be looking at an investment worth $1,134.

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