What Happened?
Shares of investment banking firm Jefferies Financial Group (NYSE:JEF) jumped 4% in the morning session after a report from Bloomberg noted that Sumitomo Mitsui Financial Group (SMFG) weighed lifting its stake in the company to around 20%.
This potential move signaled a major vote of confidence from the large Japanese bank, suggesting a deeper and more strategic partnership ahead. A larger stake by SMFG could bolster Jefferies' position and provide it with greater stability and resources.
Adding to the upbeat mood, the market also reacted positively to broader economic news as the U.S. Federal Reserve cut its benchmark interest rate by 25 basis points. Such cuts often fueled market rallies and can particularly benefit financial firms by stimulating deal-making and investment activity.
After the initial pop the shares cooled down to $69.42, up 4.3% from previous close.
Is now the time to buy Jefferies? Access our full analysis report here, it’s free.
What Is The Market Telling Us
Jefferies’s shares are somewhat volatile and have had 11 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 13 days ago when the stock dropped 2% on the news that a surprisingly weak August jobs report sparked fears of an economic slowdown. The U.S. economy added only 22,000 jobs, significantly missing the 75,000 expected by analysts. While the disappointing data initially fueled hopes for a Federal Reserve interest rate cut, investor sentiment quickly soured. Concerns shifted towards the possibility of a recession, as the sluggish hiring and a rise in the unemployment rate to 4.3%—the highest since 2021—painted a grim picture of the labor market. This negative outlook overshadowed the potential for monetary easing, leading to a widespread sell-off across Wall Street.
Jefferies is down 12.1% since the beginning of the year, and at $69.42 per share, it is trading 15.1% below its 52-week high of $81.75 from December 2024. Investors who bought $1,000 worth of Jefferies’s shares 5 years ago would now be looking at an investment worth $3,900.
Here at StockStory, we certainly understand the potential of thematic investing. Diverse winners from Microsoft (MSFT) to Alphabet (GOOG), Coca-Cola (KO) to Monster Beverage (MNST) could all have been identified as promising growth stories with a megatrend driving the growth. So, in that spirit, we’ve identified a relatively under-the-radar profitable growth stock benefiting from the rise of AI, available to you FREE via this link.