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:
- Beauty and Cosmetics Retailer company Ulta (NASDAQ: ULTA) jumped 3.1%. Is now the time to buy Ulta? Access our full analysis report here, it’s free.
- Electronics & Gaming Retailer company Best Buy (NYSE: BBY) jumped 3.1%. Is now the time to buy Best Buy? Access our full analysis report here, it’s free.
- Home Furniture Retailer company RH (NYSE: RH) jumped 3.5%. Is now the time to buy RH? Access our full analysis report here, it’s free.
- Vehicle Retailer company CarMax (NYSE: KMX) jumped 3%. Is now the time to buy CarMax? Access our full analysis report here, it’s free.
- Department Store company Dillard's (NYSE: DDS) jumped 3%. Is now the time to buy Dillard's? Access our full analysis report here, it’s free.
Zooming In On RH (RH)
RH’s shares are extremely volatile and have had 36 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.
RH is down 37.7% since the beginning of the year, and at $246 per share, it is trading 45.9% below its 52-week high of $454.52 from January 2025. Investors who bought $1,000 worth of RH’s shares 5 years ago would now be looking at an investment worth $780.95.
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