What Happened?
A number of stocks jumped in the afternoon session after comments from a key Federal Reserve official hinted at a potential interest rate cut in December.
John Williams, president of the Federal Reserve Bank of New York, signaled he was open to lowering the fed funds rate—the key interest rate that banks charge each other for overnight loans—to support the job market. Speaking at an event, Williams stated that he sees “room for a further adjustment” for interest rates, which immediately shifted market expectations. Following his remarks, the perceived likelihood of an interest rate cut at the Federal Reserve's December meeting flipped from unlikely to more likely than not. The prospect of lower borrowing costs sent a wave of optimism through the markets, leading to a rally in major indices like the S&P 500, Dow Jones Industrial Average, and the Nasdaq Composite.
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:
- Electronic Components & Manufacturing company Knowles (NYSE:KN) jumped 3.6%. Is now the time to buy Knowles? Access our full analysis report here, it’s free for active Edge members.
- IT Services & Consulting company Kyndryl (NYSE:KD) jumped 3.6%. Is now the time to buy Kyndryl? Access our full analysis report here, it’s free for active Edge members.
- Data & Business Process Services company Equifax (NYSE:EFX) jumped 3.8%. Is now the time to buy Equifax? Access our full analysis report here, it’s free for active Edge members.
- Office & Commercial Furniture company HNI (NYSE:HNI) jumped 4.1%. Is now the time to buy HNI? Access our full analysis report here, it’s free for active Edge members.
- Digital Media & Content Platforms company IAC (NASDAQ:IAC) jumped 4.1%. Is now the time to buy IAC? Access our full analysis report here, it’s free for active Edge members.
Zooming In On IAC (IAC)
IAC’s shares are somewhat volatile and have had 11 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 4 months ago when the stock dropped 13.5% on the news that the company reported second-quarter revenue that fell short of analyst expectations, overshadowing a significant profit. The media and internet company’s revenue landed at $586.9 million, a 7% drop from the year-ago period. This decline stemmed from weakness in several key areas. The Search segment’s revenue plummeted 39%, while the Care.com unit saw a 6% decrease. Although IAC recorded a profit of $2.57 per share, a stark reversal from last year's loss, this figure included a large unrealized gain from its investment in MGM Resorts International. Investors appeared to focus on the operational weakness rather than the investment-driven profit.
IAC is down 23.2% since the beginning of the year, and at $32.71 per share, it is trading 34.6% below its 52-week high of $50 from March 2025. Investors who bought $1,000 worth of IAC’s shares 5 years ago would now be looking at an investment worth $233.42.
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