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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. The positive sentiment followed comments from New York Federal Reserve President John Williams, a voting member of the rate-setting Federal Open Market Committee (FOMC), who indicated he sees room for further policy easing. Following his remarks, the probability of a December rate cut surged from 39% to 71%, according to the CME FedWatch Tool, causing Treasury yields to fall. Lower interest rates can be particularly beneficial for growth-oriented sectors like software, as they increase the present value of future earnings. This renewed hope provided a boost to the sector, which had recently faced pressure from concerns over high valuations in artificial intelligence.

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:

• Content Delivery company F5 jumped 3.5%. Is now the time to buy F5? Access our full analysis report here, it’s free for active Edge members.
• Payments Software company Flywire jumped 3.7%. Is now the time to buy Flywire? Access our full analysis report here, it’s free for active Edge members.
• Advertising Software company PubMatic jumped 4%. Is now the time to buy PubMatic? Access our full analysis report here, it’s free for active Edge members.
• Vertical Software company Bentley Systems jumped 3.7%. Is now the time to buy Bentley Systems? Access our full analysis report here, it’s free for active Edge members.
• Spend Management Software company American Express Global Business Travel jumped 4.1%. Is now the time to buy American Express Global Business Travel? Access our full analysis report here, it’s free for active Edge members.

Zooming In On American Express Global Business Travel (GBTG)

American Express Global Business Travel’s shares are not very volatile and have only had 9 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 4 months ago when the stock gained 13.2% on the news that the company reported second-quarter financial results that surpassed expectations and raised its full-year guidance. 

The company's revenue increased 1% year-over-year to $631 million, while adjusted EBITDA grew 4% to $133 million. In another positive development, the U.S. Department of Justice dismissed its lawsuit that challenged the acquisition of CWT. The strong performance prompted an analyst at Deutsche Bank to raise the price target on the stock while the firm maintained a 'Buy' rating. Management also announced plans to activate a $300 million share buyback program.

American Express Global Business Travel is down 22.4% since the beginning of the year, and at $7.11 per share, it is trading 25.7% below its 52-week high of $9.56 from December 2024. Investors who bought $1,000 worth of American Express Global Business Travel’s shares 5 years ago would now be looking at an investment worth $736.27.