What Happened?
A number of stocks fell in the afternoon session after reports revealed a drop in consumer confidence amid mounting fears of a potential U.S. government shutdown.
The Conference Board's Consumer Confidence Index fell to 94.2 in September, a larger-than-expected decline fueled by pessimism over inflation and the job market. This drop suggests consumers may cut back on borrowing and spending, directly impacting banks' profitability. Adding to the concerns, Federal Reserve Vice Chair Philip N. Jefferson highlighted a cooling economy, with GDP growth slowing to 1.5% in the first half of 2025 due to weaker consumer spending. Compounding these issues is the looming threat of a U.S. government shutdown, as a deal on a spending plan remains elusive. A shutdown could further squeeze the economy and delay crucial economic data, increasing market uncertainty and prompting a cautious approach from investors.
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:
- Thrifts & Mortgage Finance company Ready Capital (NYSE: RC) fell 5%. Is now the time to buy Ready Capital? Access our full analysis report here, it’s free.
- Thrifts & Mortgage Finance company Franklin BSP Realty Trust (NYSE: FBRT) fell 3.3%. Is now the time to buy Franklin BSP Realty Trust? Access our full analysis report here, it’s free.
- Thrifts & Mortgage Finance company Annaly Capital Management (NYSE: NLY) fell 3.5%. Is now the time to buy Annaly Capital Management? Access our full analysis report here, it’s free.
- Thrifts & Mortgage Finance company Rocket Companies (NYSE: RKT) fell 4.7%. Is now the time to buy Rocket Companies? Access our full analysis report here, it’s free.
- Thrifts & Mortgage Finance company Mr. Cooper Group (NASDAQ: COOP) fell 4%. Is now the time to buy Mr. Cooper Group? Access our full analysis report here, it’s free.
Zooming In On Ready Capital (RC)
Ready Capital’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 about 1 month ago when the stock gained 7.7% 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.
Ready Capital is down 43.3% since the beginning of the year, and at $3.90 per share, it is trading 48.9% below its 52-week high of $7.63 from September 2024. Investors who bought $1,000 worth of Ready Capital’s shares 5 years ago would now be looking at an investment worth $348.21.
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