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:

• Footwear Retailer company Shoe Carnival (NASDAQ: SCVL) jumped 4.4%. Is now the time to buy Shoe Carnival? Access our full analysis report here, it’s free.
• Home Furniture Retailer company Arhaus (NASDAQ: ARHS) jumped 6.3%. Is now the time to buy Arhaus? Access our full analysis report here, it’s free.
• Beauty and Cosmetics Retailer company Warby Parker (NYSE: WRBY) jumped 9.3%. Is now the time to buy Warby Parker? Access our full analysis report here, it’s free.
• Apparel Retailer company Zumiez (NASDAQ: ZUMZ) jumped 3.8%. Is now the time to buy Zumiez? Access our full analysis report here, it’s free.
• Sports & Outdoor Equipment Retailer company Academy Sports (NASDAQ: ASO) jumped 6%. Is now the time to buy Academy Sports? Access our full analysis report here, it’s free.

Zooming In On Warby Parker (WRBY)

Warby Parker’s shares are extremely volatile and have had 30 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 12 days ago when the stock dropped 3.7% on the news that the broader market tumbled in the morning session after a surprisingly weak U.S. jobs report and the announcement of new, widespread tariffs on imported goods. The U.S. economy added only 73,000 jobs in July, falling far short of the 109,000 forecast. Compounding the issue, job gains for May and June were revised down by a combined 258,000, signaling what some see as “increasing signs of fragility” in the labor market. Simultaneously, the White House announced new tariffs, ranging from 10% to 41%, on goods from 92 countries. This “double whammy” of negative news has intensified fears that ongoing trade wars are damaging the U.S. economy. The combination of a weaker labor market and new trade barriers has rattled investor confidence, fueling expectations that the Federal Reserve may be forced to cut interest rates to support the economy.

Warby Parker is up 6.5% since the beginning of the year, and at $27 per share, it is trading close to its 52-week high of $28.42 from January 2025. Investors who bought $1,000 worth of Warby Parker’s shares at the IPO in September 2021 would now be looking at an investment worth $495.50.

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