Why Opendoor Technologies Stock Soared 9.6% Today
Key Points
Opendoor stock reversed its week-long decline after the president of the New York Federal Reserve Bank indicated that more rate cuts could be coming.
Opendoor's core business is particularly influenced by interest rates.
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Shares of Opendoor Technologies (NASDAQ: OPEN) spiked on Friday, finishing the day up 9.6%. The jump comes as the S&P 500 gained 0.9% and the Nasdaq Composite rose 0.8%.
The president of the Federal Reserve Bank of New York, John Williams, spoke on Friday, indicating the Fed may opt to cut rates further in its upcoming meeting.
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More rate cutting could be in store
As the head of the New York Fed, Williams is one of the more influential members of the Federal Open Market Committee (FOMC), the body responsible for setting interest rates. In a speech today, he indicated there would likely be "further adjustment in the near term," raising market hopes the FOMC will vote to cut rates once again in December.
Opendoor benefits directly from lowered rates, so the prospect of another cut sent Opendoor stock flying.
Image source: Getty Images.
Opendoor stock is risky
While the digital real estate disruptor operates in a market with genuine potential for innovation, its business model makes it extremely vulnerable to factors out of its control, interest rates chief among them.
The company is operating at a loss and relies heavily on debt. I would avoid the stock unless you have an exceptionally high risk tolerance.
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Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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