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:
- Apparel and Accessories company Ralph Lauren (NYSE:RL) jumped 4.6%. Is now the time to buy Ralph Lauren? Access our full analysis report here, it’s free for active Edge members.
- Broadcasting company Gray Television (NYSE:GTN) jumped 4.7%. Is now the time to buy Gray Television? Access our full analysis report here, it’s free for active Edge members.
- Travel and Vacation Providers company Norwegian Cruise Line (NYSE:NCLH) jumped 4.8%. Is now the time to buy Norwegian Cruise Line? Access our full analysis report here, it’s free for active Edge members.
Zooming In On Norwegian Cruise Line (NCLH)
Norwegian Cruise Line’s shares are very volatile and have had 22 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 24 days ago when the stock dropped 4.5% on the news that its competitor, Royal Caribbean Group, reported third-quarter revenue that fell short of analyst expectations, sparking broader concerns across the cruise industry.
Royal Caribbean's revenue for the quarter rose to $5.14 billion, but this figure missed the average analyst estimate of $5.17 billion. This marked the fifth consecutive quarter that Royal Caribbean failed to meet revenue projections, amplifying investor worries. The negative results from a major industry player were interpreted as a potential sign of weaker-than-expected demand for the entire sector. Consequently, the pessimistic sentiment spread, impacting shares of other cruise operators as investors grew cautious about the industry's near-term performance.
Norwegian Cruise Line is down 29.5% since the beginning of the year, and at $18.27 per share, it is trading 37.2% below its 52-week high of $29.07 from January 2025. Investors who bought $1,000 worth of Norwegian Cruise Line’s shares 5 years ago would now be looking at an investment worth $874.58.
The 1999 book Gorilla Game predicted Microsoft and Apple would dominate tech before it happened. Its thesis? Identify the platform winners early. Today, enterprise software companies embedding generative AI are becoming the new gorillas. Click here for access to our special report that reveals one profitable leader already riding this wave.