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:
- Traditional Media & Publishing company IMAX (NYSE:IMAX) jumped 2.5%. Is now the time to buy IMAX? Access our full analysis report here, it’s free for active Edge members.
- Safety & Security Services company CoreCivic (NYSE:CXW) jumped 2.9%. Is now the time to buy CoreCivic? Access our full analysis report here, it’s free for active Edge members.
Zooming In On CoreCivic (CXW)
CoreCivic’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 previous big move we wrote about was 15 days ago when the stock dropped 12.2% on the news that the company reported third-quarter results that missed profit expectations and lowered its full-year earnings guidance. While revenue grew a strong 18.1% year-over-year to $580.4 million and beat Wall Street's expectations, this was overshadowed by weakness in profitability. The company's adjusted earnings of $0.24 per share fell short of analysts' estimates of $0.26. More significantly, management slashed its full-year outlook, cutting its adjusted EPS guidance to a midpoint of $1.03, a 6.8% decrease from prior projections. Full-year EBITDA guidance was also lowered, signaling to investors that near-term profitability pressures outweighed the strong quarterly sales growth.
CoreCivic is down 21.4% since the beginning of the year, and at $17.08 per share, it is trading 26% below its 52-week high of $23.06 from May 2025. Investors who bought $1,000 worth of CoreCivic’s shares 5 years ago would now be looking at an investment worth $2,408.
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