What Happened?

A number of stocks jumped in the afternoon session after comments from a key Federal Reserve official boosted 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:

• Diversified Banks company Truist Financial (NYSE: TFC) jumped 3.1%. Is now the time to buy Truist Financial? Access our full analysis report here, it’s free for active Edge members.
• Diversified Banks company U.S. Bancorp (NYSE: USB) jumped 3.1%. Is now the time to buy U.S. Bancorp? Access our full analysis report here, it’s free for active Edge members.
• Regional Banks company First Hawaiian Bank (NASDAQ: FHB) jumped 3%. Is now the time to buy First Hawaiian Bank? Access our full analysis report here, it’s free for active Edge members.

Zooming In On Truist Financial (TFC)

Truist Financial’s shares are not very volatile and have only had 7 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 3 months ago when the stock gained 3.9% on the news that the major indices rebounded, as Fed Chair Jerome Powell delivered dovish remarks at the much-awaited Jackson Hole symposium. Powell suggested that with inflation risks moderating and unemployment remaining low, the Federal Reserve might consider a shift in its monetary policy stance, including potential interest rate cuts. This outlook eased market concerns about prolonged high interest rates and their impact on economic growth. The prospect of lower borrowing costs bolstered investor confidence, particularly in sectors that have lagged, leading to a broad rally across the market.

Truist Financial is up 5.2% since the beginning of the year, and at $45.57 per share, it is trading close to its 52-week high of $48.15 from February 2025. Investors who bought $1,000 worth of Truist Financial’s shares 5 years ago would now be looking at an investment worth $969.99.

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