Carvana Stock (NYSE:CVNA)
This morning, investors regained some confidence in equities in general, sending Carvana stock soaring. Investors’ renewed interest in Carvana’s stock may be related to a Fed official’s recent comments on the dangers of hiking the federal funds rate too rapidly to combat inflation. As of 11:32 AM EST, the price of Carvana stock has increased by 5.7%.
What’s the Reason?
Carvana stock price dropped yesterday with the rest of the market as investors worried that the Federal Reserve’s aggressive rate rises might slow the economy too much and drive it into a severe recession.
The market has been reeling since the Fed raised the federal funds rate by 75 basis points last week, with the S&P 500 plunging for five consecutive trading days and hitting a two-year bottom yesterday.
However, today, Carvana (NYSE:CVNA) investors abandoned their previous pessimism. Reason why? Charles Evans, president of the Federal Reserve Bank of Chicago, expressed concern to CNBC that the Fed may be increasing interest rates too rapidly without giving the economy the time to adjust.
With “three consecutive 75 basis point rises” and “talk of more” to reach 4.25–4.5% by the end of the year, “you’re not leaving much time to kind of look at each monthly release,” Evans added.
Today, Carvana stock investors are analyzing Evans’s remarks in the hopes that they signal a possible slowing of the Fed’s rate-hiking cycle.
What’s Next?
Owners of Carvana stock should enjoy today’s price increase but not get too carried away. Despite Evans’ words, the Fed may not be done with its aggressive rate rises. Moreover, the current steps taken by the Fed to contain inflation may still severely slow down the economy, which may be bad news for Carvana’s (NYSE:CVNA) business.
Because of this, rather than trading based on daily news, prospective investors in Carvana’s stock should consider the company’s fundamental business and its potential in the used-car selling industry.
Featured Image- Megapixl @ Actionsports
Author Shariq Khan 
