What Happened?
A number of stocks jumped in the afternoon session after markets continued to rally amid growing investor optimism for a Federal Reserve interest rate cut in September. This optimism was spurred by a recent Consumer Price Index (CPI) report that did not show runaway inflation, increasing the perceived probability of a rate cut to over 90%. Lower interest rates are generally seen as a positive for the economy as they reduce borrowing costs for consumers, which can stimulate spending on non-essential goods. Consequently, investors bid up shares in the apparel, home furnishings, and automotive retail industries in anticipation of stronger consumer demand.
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:
- Vehicle Retailer company Camping World (NYSE: CWH) jumped 6.7%. Is now the time to buy Camping World? Access our full analysis report here, it’s free.
- Specialty Retail company Petco (NASDAQ: WOOF) jumped 3.8%. Is now the time to buy Petco? Access our full analysis report here, it’s free.
- Apparel Retailer company Tilly's (NYSE: TLYS) jumped 18%. Is now the time to buy Tilly's? Access our full analysis report here, it’s free.
- Apparel Retailer company American Eagle (NYSE: AEO) jumped 7.3%. Is now the time to buy American Eagle? Access our full analysis report here, it’s free.
- Footwear Retailer company Designer Brands (NYSE: DBI) jumped 9.8%. Is now the time to buy Designer Brands? Access our full analysis report here, it’s free.
Zooming In On Tilly's (TLYS)
Tilly’s shares are extremely volatile and have had 74 moves greater than 5% over the last year. But moves this big are rare even for Tilly's and indicate this news significantly impacted the market’s perception of the business.
Tilly's is down 66.7% since the beginning of the year, and at $1.52 per share, it is trading 74.2% below its 52-week high of $5.90 from August 2024. Investors who bought $1,000 worth of Tilly’s shares 5 years ago would now be looking at an investment worth $258.94.
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