What Happened?
Shares of glass and electronic component manufacturer Corning (NYSE: GLW) jumped 2.9% in the morning session after UBS upgraded the stock from Neutral to Buy, pointing to growth potential from artificial intelligence.
The investment bank also lifted its price target on the shares to $84.00. This optimistic view stemmed from the growing demand for fiber optics, a key component in building out AI infrastructure. The upgrade added to a wave of positive sentiment, as Mizuho and Oppenheimer also recently increased their price targets for the company. This news followed Corning's strong second-quarter performance, where it surpassed Wall Street's expectations for both sales and earnings per share. Investor confidence pushed the stock to a new 52-week high, reflecting the company's solid financial health and strong market performance over the previous year.
After the initial pop the shares cooled down to $79.31, up 3.2% from previous close.
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What Is The Market Telling Us
Corning’s shares are not very volatile and have only had 5 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 previous big move we wrote about was 8 days ago when the stock gained 3% on the news that an unexpected drop in the Producer Price Index (PPI) for August, signaled easing inflation and raised expectations for a potential Federal Reserve interest rate cut.
The U.S. Bureau of Labor Statistics reported that the PPI, which measures wholesale prices, edged down 0.1% last month, contrary to analyst expectations for a 0.3% rise. This data gives the Federal Reserve more flexibility to consider lowering interest rates to stimulate the economy.
According to the CME FedWatch Tool, the probability of a quarter-point rate cut at the next Fed meeting has surged to 90%. Lower interest rates typically benefit the industrial sector by reducing borrowing costs for new projects and expansion, potentially leading to increased economic activity and demand for industrial goods.
Corning is up 69.8% since the beginning of the year, and at $79.31 per share, has set a new 52-week high. Investors who bought $1,000 worth of Corning’s shares 5 years ago would now be looking at an investment worth $2,445.
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