What Happened?
A number of stocks fell in the afternoon session after a confluence of negative economic data pointed to a weak economy.
The latest Survey of Consumer Expectations from the New York Fed revealed that households' short-term inflation expectations are rising, while their outlook on the labor market is deteriorating. Consumers expressed greater concern about potential job losses and expect lower earnings growth, factors that directly impact discretionary spending. Adding to the unease, Chief Economist at Moody's Analytics, Mark Zandi, warned that 22 states are already showing clear signs of a recession, placing the broader U.S. economy in a precarious position. The ongoing U.S. government shutdown further dampens sentiment, threatening to weigh on incomes and purchasing power.
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:
- Discount Retailer company Five Below (NASDAQ:FIVE) fell 4.4%. Is now the time to buy Five Below? Access our full analysis report here, it’s free for active Edge members.
- Apparel Retailer company Torrid (NYSE:CURV) fell 4.9%. Is now the time to buy Torrid? Access our full analysis report here, it’s free for active Edge members.
- Vehicle Retailer company America's Car-Mart (NASDAQ:CRMT) fell 3.7%. Is now the time to buy America's Car-Mart? Access our full analysis report here, it’s free for active Edge members.
- Auto Parts Retailer company Monro (NASDAQ:MNRO) fell 3.3%. Is now the time to buy Monro? Access our full analysis report here, it’s free for active Edge members.
- Discount Retailer company Ollie's (NASDAQ:OLLI) fell 2.8%. Is now the time to buy Ollie's? Access our full analysis report here, it’s free for active Edge members.
Zooming In On Torrid (CURV)
Torrid’s shares are extremely volatile and have had 47 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 previous big move we wrote about was 11 days ago when the stock gained 2.6% on the news that key inflation data aligned with forecasts, bolstering hopes for continued interest rate cuts from the Federal Reserve.
The Personal Consumption Expenditures (PCE) price index, the central bank's preferred gauge of inflation, showed a slight year-over-year increase in August but did not surprise economists. This report was met with relief on Wall Street, as it suggests inflationary pressures remain contained, giving the Federal Reserve more leeway to continue its monetary easing policy. Investors interpreted the news as a positive sign that the Fed can support the economy without risking runaway inflation. The positive sentiment helped the major indices claw back some of the losses from a recent three-day slide, with stocks rising across various sectors.
Torrid is down 68% since the beginning of the year, and at $1.69 per share, it is trading 76.1% below its 52-week high of $7.06 from January 2025. Investors who bought $1,000 worth of Torrid’s shares at the IPO in June 2021 would now be looking at an investment worth $69.98.
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