What Happened?
A number of stocks jumped in the afternoon session after the latest Consumer Price Index (CPI) report showed inflation at 3.0%, fueling investor optimism for potential interest rate cuts. The CPI, a key measure of inflation, came in slightly lower than consensus forecasts on a month-over-month basis. While the 3.0% annual rate remains above the Federal Reserve's 2.0% target, the market-friendly data prompted a rally, with the S&P 500 and Nasdaq hitting record highs. For consumer-facing industries, moderating inflation and the prospect of lower interest rates are significant tailwinds. These conditions can translate into greater disposable income and improved consumer confidence, encouraging spending on non-essential goods and services. As a result, sectors like retail, travel, and automotive are seeing renewed investor interest, as they are well-positioned to benefit from this potential increase in consumer appetite.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Specialty Retail company Leslie's (NASDAQ: LESL) jumped 3%. Is now the time to buy Leslie's? Access our full analysis report here, it’s free for active Edge members.
- Boat & Marine Retailer company OneWater (NASDAQ: ONEW) jumped 5.7%. Is now the time to buy OneWater? Access our full analysis report here, it’s free for active Edge members.
Zooming In On OneWater (ONEW)
OneWater’s shares are extremely volatile and have had 43 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 4 months ago when the stock dropped 13.7% on the news that the major indices pulled back (Nasdaq -1.3%, S&P 500 -1.1%) as Israel carried out significant strikes on Iranian nuclear and military sites, dramatically escalating fears of a broader conflict in the Middle East. This development has sent crude oil prices surging, as investors fear potential disruptions to global oil supply and a wider regional conflict. The conflict has intensified investor anxiety, compounding existing market volatility, especially in risk assets like stocks, and prompting a pronounced shift toward safe-haven assets.
OneWater is down 3.6% since the beginning of the year, and at $16.56 per share, it is trading 35.8% below its 52-week high of $25.81 from November 2024. Investors who bought $1,000 worth of OneWater’s shares 5 years ago would now be looking at an investment worth $862.95.
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