Dj Chmn Petrie Sells 2659 Of Merchants Bancorp/In >Mbinn

What Happened?

A number of stocks jumped in the afternoon session after 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.

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 Merchants Bancorp jumped 3.9%. Is now the time to buy Merchants Bancorp? Access our full analysis report here, it’s free for active Edge members.
• Regional Banks company First Financial Bankshares jumped 3.8%. Is now the time to buy First Financial Bankshares? Access our full analysis report here, it’s free for active Edge members.
• Regional Banks company First Commonwealth Financial jumped 3.9%. Is now the time to buy First Commonwealth Financial? Access our full analysis report here, it’s free for active Edge members.
• Regional Banks company F.N.B. Corporation jumped 3.9%. Is now the time to buy F.N.B. Corporation? Access our full analysis report here, it’s free for active Edge members.
• Regional Banks company 1st Source jumped 3.9%. Is now the time to buy 1st Source? Access our full analysis report here, it’s free for active Edge members.

Zooming In On 1st Source (SRCE)

1st Source’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 previous big move we wrote about was 28 days ago when the stock gained 3.4% on the news that a cooler-than-expected inflation report fueled optimism for potential Federal Reserve interest rate cuts. 

The September Consumer Price Index (CPI) report indicated a 3.0% year-over-year increase in prices, just below the 3.1% that economists had forecast. While still above the Federal Reserve's 2% target, investors interpreted this softer inflation reading as a sign that price pressures are easing. This development increases the likelihood that the central bank may move to cut interest rates. Lower interest rates can benefit banks by reducing their cost of funding and potentially stimulating loan demand from businesses and consumers. The positive sentiment was widespread, contributing to a broader market rally that saw the S&P 500, Dow, and Nasdaq all reach new record highs.

1st Source is up 7.6% since the beginning of the year, and at $62.18 per share, it is trading close to its 52-week high of $67.65 from February 2025. Investors who bought $1,000 worth of 1st Source’s shares 5 years ago would now be looking at an investment worth $1,617.