What Happened?

Shares of car rental services provider Avis (NASDAQ: CAR) jumped 17.3% in the afternoon session after a major industry report showed that used car prices hit their highest levels in years. 

This is a huge win for Avis because it makes its existing fleet more valuable and lowers the costs the company faces when selling older vehicles. The stock also got a big boost from a "short squeeze." This happens when investors who bet against a stock are forced to buy it back quickly, which creates a fast wave of buying that drives the price up even further.

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What Is The Market Telling Us

Avis Budget Group’s shares are extremely volatile and have had 31 moves greater than 5% over the last year. But moves this big are rare even for Avis Budget Group and indicate this news significantly impacted the market’s perception of the business.

The previous big move we wrote about was 7 days ago when the stock gained 4.1% on the news that markets rebounded, driven by stabilizing oil prices and reports that President Trump was considering an end to the military conflict in Iran. 

According to The Wall Street Journal, the president communicated to aides his willingness to de-escalate military hostilities, even if the strategically important Strait of Hormuz remained partially closed. This news helped soothe investor concerns about a prolonged conflict and its potential to spike energy costs, which can impact industrial operations and consumer spending. 

The positive shift in sentiment was reflected across major indexes, with the S&P 500 jumping over 1% as oil prices retreated from their recent highs.

Avis Budget Group is up 92.1% since the beginning of the year, and at $246.29 per share, has set a new 52-week high. Investors who bought $1,000 worth of Avis Budget Group’s shares 5 years ago would now be looking at an investment worth $3,269.

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