What's Going On With Carvana Stock?

BY Benzinga | ECONOMIC | 11/14/23 01:42 PM EST

Carvana Co (CVNA) shares are trading higher by 17.5% to $33.64 Tuesday, despite a lack of company-specific news for the session. The stock could be rising due to a strong market boosted by positive CPI data.

What Happened With CPI Data?

In October 2023, US inflation decreased to 3.2% from the previous month's 3.7%, surprising economists who expected it to be at 3.3%. This decline suggested a continued downward trend after a summer increase. Prior to the CPI report, the market predicted an 86% chance of no change in interest rates in December.

Traders were considering the potential for up to three rate cuts in the coming year, potentially starting in June...

See Also: What's Going On With Disney Stock?

Why This Matters To Carvana Investors

Carvana (CVNA) deals with online car sales and financing. If interest rates are expected to decrease, the cost of financing for both the company and its customers could potentially decrease. Lower financing costs may encourage more people to buy cars, boosting Carvana (CVNA)'s sales and revenue.

Traders considering the potential for rate cuts might anticipate an economic environment that's conducive to growth. This positive outlook for the economy could boost confidence in companies like Carvana (CVNA), leading investors to buy its stock in anticipation of improved business prospects.

According to data from Benzinga Pro, CVNA has a 52-week high of $57.19 and a 52-week low of $3.55.

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.