Affirm Holdings ( NASDAQ: AFRM ) stock bounded 24% in Thursday trading after the October consumer price index gained 7.7% , less than the 8.0% expected, and slower than the 8.2% increase in September.
That shows the Federal Reserve's front-loaded rate hikes are starting to take effect, by lowering demand and provides an opening for the central bank to hike its policy rate in smaller increments — 50 bps vs. their four prior increases of 75-bp each.
Overall, stock and bond markets rallied on the news. the S&P 500 jumped 5.5% in the session. The 10-year Treasury yield sank 31 basis points to 3.82%. The drop in yields indicate traders expect inflation to come down. And that's tied to borrowing costs for corporations and consumers.
Affirm ( AFRM ), which provides Buy Now, Pay Later financing for consumers, cut its fiscal year guidance earlier this week, partly due to the impact of high interest rates on its funding costs.
In general, fintech, lending and payment stocks performed exceptionally well. Upstart Holdings ( UPST ) surged 27%, Block ( SQ ) +17%, PayPal ( PYPL ) +10%, LendingTree ( TREE ) +19%, Rocket Companies ( RKT ) +12%.
The prospects of moderating interest rates also benefited real estate stocks today , as that sector was pummeled by declining demand when interest rates more than doubled in the past year.
On Wednesday, SA contributor Ben Alaimo explained why he view Affirm ( AFRM ) as undervalued despite its solid execution
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Why did Affirm Holdings stock surge today? Potential for lower funding costs