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:
- Medical Devices & Supplies - Specialty company Enovis (NYSE:ENOV) jumped 8%. Is now the time to buy Enovis? Access our full analysis report here, it’s free for active Edge members.
- Specialized Medical & Nursing Services company AMN Healthcare Services (NYSE:AMN) jumped 7%. Is now the time to buy AMN Healthcare Services? Access our full analysis report here, it’s free for active Edge members.
- Healthcare Technology for Providers company Astrana Health (NASDAQ:ASTH) jumped 9.7%. Is now the time to buy Astrana Health? Access our full analysis report here, it’s free for active Edge members.
- Outpatient & Specialty Care company U.S. Physical Therapy (NYSE:USPH) jumped 6.4%. Is now the time to buy U.S. Physical Therapy? Access our full analysis report here, it’s free for active Edge members.
- Senior Health, Home Health & Hospice company AdaptHealth (NASDAQ:AHCO) jumped 6.2%. Is now the time to buy AdaptHealth? Access our full analysis report here, it’s free for active Edge members.
Zooming In On Astrana Health (ASTH)
Astrana Health’s shares are very volatile and have had 27 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 10 days ago when the stock gained 5.3% on the news that the market experienced a sharp sector rotation, as investors fled growth-oriented technology stocks and piled into value-oriented names amid growing valuation concerns. This divergence was stark: the tech-heavy Nasdaq struggled, losing 0.2%, while the Dow rallied. This shift away from tech was triggered by a series of negative catalysts in the AI sector. AI cloud provider CoreWeave slid on disappointing guidance, while chip darling Nvidia pulled back after SoftBank sold its stake. This "hurt the AI trade," dragging down related names like Micron and Oracle. As capital left tech, it sought safety in "higher quality" defensive names. Health care giants like Merck, Amgen, and Johnson & Johnson saw significant buying, boosting the Dow.
Astrana Health is down 30.1% since the beginning of the year, and at $22.52 per share, it is trading 49.8% below its 52-week high of $44.81 from December 2024. Investors who bought $1,000 worth of Astrana Health’s shares 5 years ago would now be looking at an investment worth $1,210.
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