What Happened?
A number of stocks jumped in the afternoon session after the Federal Reserve delivered its third and final interest rate cut of the year, lowering the federal funds rate by 25 basis points (0.25%) to a 3.50%-3.75% range.
This dovish action, combined with highly accommodating signals from Chair Jerome Powell and the Federal Open Market Committee (FOMC), sent the Dow Jones Industrial Average and S&P 500 surging. The market's bullish reaction was rooted in several key takeaways from the Fed's announcement. Most significantly, the central bank confirmed it would begin expanding its balance sheet by buying short-term bonds, a move that injects critical liquidity and lowers short-term Treasury yields. Furthermore, the Fed signaled a shift in priority by removing language that described the labor market as "remaining low," suggesting it would be more focused on supporting economic growth. While the Fed's official forecast projected only one cut for the next year, traders immediately priced in the expectation of more aggressive easing, banking on at least two rate reductions. This widespread anticipation of sustained, low borrowing costs and the virtual certainty that rate hikes would be off the table boosted corporate valuations and created powerful momentum for the equity market rally.
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:
- Regional Banks company Triumph Financial (NASDAQ:TFIN) jumped 4.7%. Is now the time to buy Triumph Financial? Access our full analysis report here, it’s free for active Edge members.
- Regional Banks company Old National Bank (NASDAQ:ONB) jumped 4.9%. Is now the time to buy Old National Bank? Access our full analysis report here, it’s free for active Edge members.
- Regional Banks company Glacier Bancorp (NYSE:GBCI) jumped 4.6%. Is now the time to buy Glacier Bancorp? Access our full analysis report here, it’s free for active Edge members.
- Regional Banks company First BanCorp (NYSE:FBP) jumped 4.7%. Is now the time to buy First BanCorp? Access our full analysis report here, it’s free for active Edge members.
Zooming In On Old National Bank (ONB)
Old National Bank’s shares are not very volatile and have only had 8 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 previous big move we wrote about was 19 days ago when the stock gained 4.9% on the news that comments from a key Federal Reserve official boosted 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.
Old National Bank is up 9.9% since the beginning of the year, and at $23.27 per share, it is trading close to its 52-week high of $24.45 from February 2025. Investors who bought $1,000 worth of Old National Bank’s shares 5 years ago would now be looking at an investment worth $1,408.
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.