What Happened?
Shares of alternative asset manager Ares Management (NYSE: ARES) jumped 3% in the afternoon session after Oppenheimer upgraded its rating on the stock to 'Outperform' from 'Perform' and set a price target of $180. The firm pointed to a recent sharp sell-off in financial stocks that created what it saw as a buying opportunity. Oppenheimer noted that after months of stability, the sell-off had pushed the average valuation of these stocks down significantly. This change prompted the more positive outlook on Ares Management, as technical indicators also showed the stock was in oversold territory.
After the initial pop the shares cooled down to $150, up 4.5% from previous close.
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What Is The Market Telling Us
Ares’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 previous big move we wrote about was 14 days ago when the stock dropped 3.8% on the news that the U.S. government hurtled toward a potential shutdown, sparking economic uncertainty and weighing on investor confidence. Market volatility increased as a partisan standoff pushed the federal government closer to a shutdown. If lawmakers fail to reach a spending agreement, a shutdown would begin, furloughing thousands of federal workers. This prospect has weighed on investor sentiment, creating a 'risk-off' mood in the markets as traders brace for potential economic disruption. The political uncertainty adds a layer of caution for investors heading into the final day of the month.
Adding to the weakness, a key report showed U.S. consumer confidence unexpectedly fell to a five-month low in September. The Conference Board's consumer confidence index slid to 94.2, a steeper drop than analysts had anticipated and its lowest reading since April. This downturn reflects growing pessimism among Americans about inflation and a weakening job market. Consumer confidence is a closely watched economic indicator as it gauges households' willingness to spend. A decline suggests that consumers may pull back on discretionary purchases, such as dining out or shopping for non-essential goods, which could negatively impact the future revenues and profits of companies in these sectors.
Ares is down 16.1% since the beginning of the year, and at $150 per share, it is trading 24.3% below its 52-week high of $198.22 from January 2025. Investors who bought $1,000 worth of Ares’s shares 5 years ago would now be looking at an investment worth $3,420.
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