What Happened?
Shares of investment banking firm Piper Sandler (NYSE: PIPR) jumped 4% in the afternoon session after the investment banking sector rallied as industry giants Goldman Sachs and Morgan Stanley reported strong fourth-quarter profits.
The positive results from these major Wall Street firms suggested a healthy environment for deal-making and investment banking activities. Goldman Sachs's net earnings rose 12%, while Morgan Stanley saw a 22% jump in revenue in its investment banking division. This surge was fueled by a flurry of large transactions and increased underwriting fees. When major players in a sector perform well, it often boosted investor confidence in smaller, related companies, which likely contributed to the rise in Piper Sandler's shares.
After the initial pop the shares cooled down to $374.64, up 3.9% from previous close.
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What Is The Market Telling Us
Piper Sandler’s shares are not very volatile and have only had 9 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 biggest move we wrote about over the last year was 5 months ago when the stock gained 5% on the news that the major indices rebounded, as Fed Chair Jerome Powell delivered dovish remarks at the much-awaited Jackson Hole symposium.
Powell suggested that with inflation risks moderating and unemployment remaining low, the Federal Reserve might consider a shift in its monetary policy stance, including potential interest rate cuts. This outlook eased market concerns about prolonged high interest rates and their impact on economic growth. The prospect of lower borrowing costs bolstered investor confidence, particularly in sectors that have lagged, leading to a broad rally across the market.
Piper Sandler is up 7% since the beginning of the year, and at $374.64 per share, has set a new 52-week high. Investors who bought $1,000 worth of Piper Sandler’s shares 5 years ago would now be looking at an investment worth $3,614.
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