What Happened?

A number of stocks jumped in the afternoon session after investors grew more optimistic about a potential Federal Reserve interest rate cut in December. 

The positive sentiment was fueled by comments from New York Fed President John Williams, a voting member of the rate-setting Federal Open Market Committee, who stated the central bank could cut rates "in the near term" without jeopardizing its inflation targets. Following his remarks, market expectations for a rate cut in December shifted significantly. According to the CME FedWatch Tool, the probability of a December rate reduction surged from a 37% chance earlier in the day to 70%. While lower rates can compress bank profit margins, investors often view them as a catalyst for broader economic activity, potentially boosting loan demand and reducing the risk of defaults.

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:

• Custody Bank company P10 (NYSE: PX) jumped 3.5%. Is now the time to buy P10? Access our full analysis report here, it’s free for active Edge members.
• Auto Loan company Ally Financial (NYSE: ALLY) jumped 3.4%. Is now the time to buy Ally Financial? Access our full analysis report here, it’s free for active Edge members.
• Investment Banking & Brokerage company Moelis (NYSE: MC) jumped 3.4%. Is now the time to buy Moelis? Access our full analysis report here, it’s free for active Edge members.
• Specialty Finance company Sixth Street Specialty Lending (NYSE: TSLX) jumped 3.3%. Is now the time to buy Sixth Street Specialty Lending? Access our full analysis report here, it’s free for active Edge members.

Zooming In On P10 (PX)

P10’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 biggest move we wrote about over the last year was about 2 months ago when the stock dropped 3.6% on the news that multiple insiders reported significant stock sales, raising concerns for investors. An SEC filing showed that on September 22, Edwin A. Poston sold 107,976 shares for a total value of approximately $1.3 million. This followed a separate transaction where Director David M. McCoy sold 44,000 shares on September 19 for over $531,000. While companies can have strong fundamentals, large sales by key insiders can sometimes be seen by the market as a lack of confidence in the company's near-term prospects. These sales took place after the company reported a 15% earnings beat for its second quarter, but the market appeared to focus more on the insider activity, leading to the stock's decline.

P10 is down 29.2% since the beginning of the year, and at $9.09 per share, it is trading 35.9% below its 52-week high of $14.17 from November 2024. Investors who bought $1,000 worth of P10’s shares at the IPO in October 2021 would now be looking at an investment worth $752.07.

While Wall Street chases Nvidia at all-time highs, an under-the-radar semiconductor supplier is dominating a critical AI component these giants can’t build without. Click here to access our full research report.