What Happened?

A number of stocks jumped in the afternoon session after investors shrugged off geopolitical tensions in Venezuela to push the S&P 500 and Dow Jones Industrial Average to new all-time highs. 

The rally was spearheaded by a resurgence in the "Magnificent Seven" and artificial intelligence sectors, with Amazon and Micron Technology posting significant gains. Market sentiment was fueled by a dual engine: "AI enthusiasm" approaching a fever pitch and expectations for a "hot" economy in 2026, supported by anticipated rate cuts and fiscal stimulus. This robust environment allowed both high-growth tech stocks and cyclical sectors to advance simultaneously.

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:

• Asset Management company TPG (NASDAQ: TPG) jumped 3.4%. Is now the time to buy TPG? Access our full analysis report here, it’s free for active Edge members.
• Credit Card company Bread Financial (NYSE: BFH) jumped 4.9%. Is now the time to buy Bread Financial? Access our full analysis report here, it’s free for active Edge members.
• Diversified Financial Services company Donnelley Financial Solutions (NYSE: DFIN) jumped 5%. Is now the time to buy Donnelley Financial Solutions? Access our full analysis report here, it’s free for active Edge members.
• Credit Card company Capital One (NYSE: COF) jumped 2.9%. Is now the time to buy Capital One? Access our full analysis report here, it’s free for active Edge members.

Zooming In On Donnelley Financial Solutions (DFIN)

Donnelley Financial Solutions’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 biggest move we wrote about over the last year was about 2 months ago when the stock gained 4.9% on the news that 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.

Donnelley Financial Solutions is up 9.8% since the beginning of the year, but at $50.12 per share, it is still trading 27.7% below its 52-week high of $69.32 from February 2025. Investors who bought $1,000 worth of Donnelley Financial Solutions’s shares 5 years ago would now be looking at an investment worth $2,711.

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