What Happened?
Shares of payment processing company Shift4 Payments (NYSE:FOUR) jumped 5.6% in the afternoon session after 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.
The shares closed the day at $69.00, up 5.2% from previous close.
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What Is The Market Telling Us
Shift4’s shares are quite volatile and have had 18 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 3 days ago when the stock dropped 2.9% on the news that investors grew concerned over sky-high valuations in the artificial intelligence sector amid fading hopes for an imminent interest rate cut. Companies at the center of this year's AI boom were among the biggest fallers, with chipmaker Nvidia, Microsoft, and Google's parent company Alphabet all seeing declines. The sell-off reflects broader market anxiety, as the Dow Jones Industrial Average also dropped to a one-month low. This pessimism was compounded by worries that the US Federal Reserve may not lower interest rates as soon as previously hoped.
Shift4 is down 35.9% since the beginning of the year, and at $69.50 per share, it is trading 44.7% below its 52-week high of $125.66 from February 2025. Investors who bought $1,000 worth of Shift4’s shares 5 years ago would now be looking at an investment worth $1,139.
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