Lyft Shares Rise as Inflation Data Fuels Rate cut Hopes
NEW YORK, September 13, 2023 – Lyft (LYFT) shares are moving higher Wednesday, building on a year-to-date surge, as cooler-than-expected wholesale inflation data strengthens expectations for an interest rate cut by the Federal Reserve. The stock was trading at a 52-week high of $19.42 per share as of market close.
Lyft’s shares are known for volatility, having experienced 24 moves of greater than 5% in the last year. Today’s increase, though, is viewed by the market as meaningful, though not fundamentally altering the long-term perception of the business.
The rally follows the release of the U.S. Bureau of Labor statistics’ Producer Price Index (PPI) report, which revealed a 0.1% decline in wholesale inflation for August - a surprise drop compared to the anticipated 0.3% increase. This cooling inflation has considerably boosted market predictions of a shift in the central bank’s monetary policy.
The CME FedWatch Tool now indicates a 90% probability of a 25-basis point rate cut at the Federal Reserve’s upcoming meeting. Lower interest rates generally reduce borrowing costs for companies and can stimulate economic activity, factors investors see as positive for growth-oriented tech stocks like Lyft.
Year-to-date, Lyft has increased 42.2%. However, long-term investors have experienced mixed results; a $1,000 investment in Lyft shares five years ago would currently be valued at $642.24.
Five days prior, on September 8th, the stock gained 4% following the release of the initial PPI report.