What Happened?
A number of stocks jumped in the afternoon session after comments from a key Federal Reserve official bolstered hopes for an interest rate cut. New York Federal Reserve President John Williams stated he sees “room for a further adjustment” in the near term, sparking a significant market rally. Following his remarks, the probability of the central bank cutting rates at its December meeting jumped from 39% to over 73%, according to the CME FedWatch tool. This positive sentiment provided relief to markets amid concerns over high valuations, particularly in AI-related stocks.
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 Choice Hotels (NYSE:CHH) jumped 5.5%. Is now the time to buy Choice Hotels? Access our full analysis report here, it’s free for active Edge members.
- Leisure Facilities company Planet Fitness (NYSE:PLNT) jumped 4.9%. Is now the time to buy Planet Fitness? Access our full analysis report here, it’s free for active Edge members.
- Apparel and Accessories company PVH (NYSE:PVH) jumped 4.9%. Is now the time to buy PVH? Access our full analysis report here, it’s free for active Edge members.
- Apparel and Accessories company G-III (NASDAQ:GIII) jumped 5.5%. Is now the time to buy G-III? Access our full analysis report here, it’s free for active Edge members.
- Footwear company Deckers (NYSE:DECK) jumped 5.1%. Is now the time to buy Deckers? Access our full analysis report here, it’s free for active Edge members.
Zooming In On Choice Hotels (CHH)
Choice Hotels’s shares are not very volatile and have only had 3 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 2 months ago when the stock dropped 1.8% on the news that the stock continued its recent downward trend, reaching a new 52-week low and entering technically oversold territory. The decline pushed the stock's Relative Strength Index (RSI), a technical indicator of momentum, to a reading of 29. An RSI below 30 often suggests a stock is oversold, meaning the recent selling may be overextended. This movement continues the negative sentiment from last week when the stock hit a 52-week low of $116.05 on Friday. Investor concerns may also be linked to the company's second-quarter financial results reported in August. While Choice Hotels surpassed earnings per share expectations, its revenue of $426 million fell short of the anticipated $430.18 million, highlighting challenges in the current economic climate.
Choice Hotels is down 35.9% since the beginning of the year, and at $90.77 per share, it is trading 41.8% below its 52-week high of $155.97 from February 2025. Investors who bought $1,000 worth of Choice Hotels’s shares 5 years ago would now be looking at an investment worth $900.94.
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