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Carvana Stock Rises Ahead Of Fed Decision

Benzinga·12/10/2025 17:30:54

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Carvana Co (NYSE:CVNA) stock is trading higher Wednesday as markets brace for a pivotal Federal Reserve decision that is widely expected to deliver a third consecutive interest rate reduction. Here’s what investors need to know.

Carvana stock is challenging resistance. Why did CVNA hit a new high?

What To Know: While CME FedWatch data indicates a 25-basis-point cut is nearly fully priced in for the Dec. 10 meeting, analysts caution that the real market mover will be the central bank's forward guidance.

The looming risk is a “hawkish cut,” where Chair Jerome Powell potentially signals that this phase of risk management easing is complete and that the committee will focus on a slower, meeting-by-meeting approach unless economic data forces their hand.

For Carvana, the stakes of this monetary policy shift are high because its vertically integrated digital dealership model is doubly leveraged to interest rate fluctuations.

On the demand side, lower rates are critical for alleviating the affordability crisis facing used car buyers. A reduction in the federal funds rate eventually flows through to auto loan rates, lowering monthly payments and unlocking pent-up consumer demand.

Simultaneously, Carvana's profitability is closely tied to the asset-backed securities market, where it generates revenue by originating loans and selling them to investors.

In a lower-rate environment, the spread Carvana captures on these securitizations typically widens, directly boosting Gross Profit Per Unit, while simultaneously reducing the variable interest costs associated with holding vehicle inventory.

However, the hawkish scenario outlined by analysts poses a threat to this optimistic outlook. If updated economic projections reveal a 2026 dot plot with a median of only a single cut, the aggressive cost-of-capital relief investors are banking on may materialize far more slowly than anticipated.

With experts warning that the Fed may now hit the brakes on easing, Carvana's interest-rate-sensitive rally could face resistance if the central bank confirms that rates will remain restrictive for longer.

Benzinga Edge Rankings: Underscoring the market’s current bullishness, Benzinga Edge data assigns the stock a massive Growth score of 99.16 and a Momentum score of 90.32, reflecting strong technical and fundamental optimism heading into the decision.

CVNA Price Action: Carvana shares were up 1.01% at $460.79 at the time of publication on Wednesday. The stock is trading at a new 52-week high, according to Benzinga Pro data.

From a technical perspective, Carvana is trading approximately 32.2% above its 50-day moving average of $349.40 and about 49.1% above its 200-day moving average of $309.74.

Such a substantial distance from these moving averages indicates a robust bullish trend, suggesting that the stock has gained considerable traction in the market.

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