What Happened?
Shares of telecommunications infrastructure company Lumen Technologies (NYSE: LUMN) jumped 4.5% in the afternoon session after Citi raised its price target on the stock to $7.50 from $6 and kept a Buy rating on the shares.
The investment firm saw lower interest rates and the company's recent debt refinancings as positive developments for the stock. This sentiment was supported by Lumen's announcement that it was advancing its multi-year network expansion to meet demand from the artificial intelligence (AI) economy. The company was aiming to add millions of new fiber miles to support enterprise AI needs.
The shares closed the day at $5.96, up 5.5% from previous close.
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What Is The Market Telling Us
Lumen’s shares are extremely volatile and have had 49 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 2 days ago when the stock dropped 5.8% on the news that Federal Reserve Chair Jerome Powell delivered cautious remarks on the economy, spooking investors and pulling indexes back from record highs.
Speaking for the first time since the central bank's recent interest rate cut, Powell described the current economic landscape as a "challenging situation." He highlighted the difficult task of balancing a weakening labor market against persistent inflation risks. Powell also commented that equity prices appeared "fairly highly valued," adding to investor concerns and prompting profit-taking. The cautious tone from the Fed chair drove declines across major indexes, including the S&P 500 and the tech-heavy Nasdaq, as the market reassessed the path forward for monetary policy.
Lumen is up 6.4% since the beginning of the year, but at $5.97 per share, it is still trading 41% below its 52-week high of $10.12 from November 2024. Investors who bought $1,000 worth of Lumen’s shares 5 years ago would now be looking at an investment worth $584.72.
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