Why Newmont Stock Just Popped

Newmont Corporation’s shares jumped about 2.8% by 10 a.m. ET Thursday (NEM +3.17%), after investors stepped back from a sell-off sparked Wednesday by the Federal Reserve raising interest rates for the first time in three years. The Fed, led by new chair Kevin Warsh, increased the target rate by 0.25% to a range of 3.75%–4%, citing that inflation has been “too high and has been for too long.” The article says higher rates typically make mortgages and credit card interest more expensive and push bond yields up—reducing gold’s appeal since it doesn’t generate interest. Gold slid to $4,333, its lowest level in a month, but regained nearly $100 to above $4,410 Thursday. Valuation is central: Newmont trades around 15.7 times trailing earnings, analysts expect nearly 15% annual earnings growth for five years, and it pays a 0.9% dividend.