What Happened?
A number of stocks jumped in the afternoon session after a cooler-than-expected inflation report fueled optimism for potential Federal Reserve rate cuts. The September Consumer Price Index (CPI) rose 3.0% year-over-year, coming in just below the 3.1% analysts had forecast. While still above the Federal Reserve's 2% target, investors interpreted the slight cooling as a sign that inflationary pressures may be easing, potentially giving the central bank room to consider interest rate cuts in the near future. Sectors that are typically sensitive to interest rates, such as real estate and utilities, saw a notable lift. Lower rates can reduce borrowing costs and increase the appeal of dividend-paying stocks, boosting investor confidence in these areas.
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:
- Travel and Vacation Providers company Delta (NYSE:DAL) jumped 4.2%. Is now the time to buy Delta? Access our full analysis report here, it’s free for active Edge members.
- Travel and Vacation Providers company United Airlines (NASDAQ:UAL) jumped 3.6%. Is now the time to buy United Airlines? Access our full analysis report here, it’s free for active Edge members.
- Leisure Products company Latham (NASDAQ:SWIM) jumped 2.4%. Is now the time to buy Latham? Access our full analysis report here, it’s free for active Edge members.
- Real Estate Services company eXp World (NASDAQ:EXPI) jumped 3.1%. Is now the time to buy eXp World? Access our full analysis report here, it’s free for active Edge members.
- Real Estate Services company RE/MAX (NYSE:RMAX) jumped 2.7%. Is now the time to buy RE/MAX? Access our full analysis report here, it’s free for active Edge members.
Zooming In On Delta (DAL)
Delta’s shares are quite volatile and have had 18 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 gained 4.7% on the news that the company reported third-quarter results that surpassed Wall Street's expectations for both revenue and profit. The airline posted GAAP earnings of $2.17 per share on revenue of $16.67 billion, which beat analysts' estimates by 39.8% and 3.8%, respectively. The positive results were supported by a 6.4% year-on-year increase in revenue. The company also benefited from improved operational efficiency, as its operating margin increased to 10.1% from 8.9% in the same quarter last year. Looking ahead, Delta provided an optimistic revenue forecast for the fourth quarter, with its guidance of $16.03 billion coming in above expectations. However, the company's full-year earnings per share guidance of $6.00 at the midpoint fell short of consensus estimates.
Delta is up 3.2% since the beginning of the year, but at $60.95 per share, it is still trading 11.7% below its 52-week high of $69.06 from February 2025. Investors who bought $1,000 worth of Delta’s shares 5 years ago would now be looking at an investment worth $1,909.
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