What Happened?
A number of stocks fell in the afternoon session after President Trump threatened to impose "massive" new tariffs on Chinese imports, reigniting trade war fears.
The unexpected announcement shattered a monthslong calm on Wall Street, sending major indices tumbling. The S&P 500 dropped around 1.3%, while the tech-rich Nasdaq Composite fell 1.7%. Investors reacted by selling off stocks, particularly in the technology and retail sectors, amid concerns that escalating trade tensions could disrupt global supply chains and increase costs for companies. The sell-off marked a significant reversal from the morning's slight gains, highlighting the market's sensitivity to geopolitical trade developments.
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:
- Online Marketplace company Etsy (NASDAQ: ETSY) fell 5%. Is now the time to buy Etsy? Access our full analysis report here, it’s free for active Edge members.
- Social Networking company Pinterest (NYSE: PINS) fell 4.1%. Is now the time to buy Pinterest? Access our full analysis report here, it’s free for active Edge members.
- Gig Economy company Lyft (NASDAQ: LYFT) fell 3.9%. Is now the time to buy Lyft? Access our full analysis report here, it’s free for active Edge members.
- Social Networking company Yelp (NYSE: YELP) fell 3.3%. Is now the time to buy Yelp? Access our full analysis report here, it’s free for active Edge members.
- Online Retail company Revolve (NYSE: RVLV) fell 5.3%. Is now the time to buy Revolve? Access our full analysis report here, it’s free for active Edge members.
Zooming In On Revolve (RVLV)
Revolve’s shares are very volatile and have had 28 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 3 days ago when the stock dropped 5.7% as investors took a breather following a record-setting rally, with concerns over the Federal Reserve's next move and a prolonged government shutdown weighing on sentiment.
The pullback came as the U.S. government shutdown extended into its second week, creating uncertainty in the market. Investors were also closely watching for signals from the Federal Reserve regarding its monetary policy. This combination of factors led to a cautious mood on Wall Street, causing traders to pause and reassess their positions after weeks of significant gains. 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.
Revolve is down 39.6% since the beginning of the year, and at $20.26 per share, it is trading 47.8% below its 52-week high of $38.80 from November 2024. Investors who bought $1,000 worth of Revolve’s shares 5 years ago would now be looking at an investment worth $1,116.
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