What Happened?
A number of stocks fell in the afternoon session after a surprisingly weak U.S. jobs report and renewed fears over international trade policy fueled concerns about a slowdown in consumer spending.
The July 2025 jobs report revealed that hiring slowed dramatically, with the U.S. economy adding only 73,000 new jobs—the weakest gain in over two years. Furthermore, job numbers for May and June were revised significantly lower, suggesting the labor market is weaker than previously thought. This is a critical headwind for restaurants, as a shaky job market often leads consumers to cut back on discretionary spending like dining out. Compounding the issue, the announcement of new U.S. tariffs on trading partners has heightened fears of inflation and a broader economic slowdown, prompting investors to sell shares in consumer-facing sectors.
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:
- Sit-Down Dining company The Cheesecake Factory (NASDAQ: CAKE) fell 3%. Is now the time to buy The Cheesecake Factory? Access our full analysis report here, it’s free.
- Sit-Down Dining company BJ's (NASDAQ: BJRI) fell 3.7%. Is now the time to buy BJ's? Access our full analysis report here, it’s free.
- Modern Fast Food company Noodles (NASDAQ: NDLS) fell 5.3%. Is now the time to buy Noodles? Access our full analysis report here, it’s free.
- Traditional Fast Food company Krispy Kreme (NASDAQ: DNUT) fell 5.4%. Is now the time to buy Krispy Kreme? Access our full analysis report here, it’s free.
- Traditional Fast Food company Portillo's (NASDAQ: PTLO) fell 4.5%. Is now the time to buy Portillo's? Access our full analysis report here, it’s free.
Zooming In On Krispy Kreme (DNUT)
Krispy Kreme’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 4 days ago when the stock dropped 7.7% on the news that investors refocused on the company's challenging fundamentals as recent meme-stock enthusiasm appeared to wane. The negative sentiment was fueled by an analyst downgrade from BNP Paribas Exane, which slashed its price target on the stock. This followed the recent termination of the company's partnership with McDonald's. Compounding the issue, a class action lawsuit accused Krispy Kreme of making misleading statements about that same partnership, contributing to investor concerns. These developments occurred against a backdrop of poor first-quarter results that showed a widening net loss and declining revenue, highlighting the fundamental headwinds the doughnut chain faced.
Krispy Kreme is down 64.7% since the beginning of the year, and at $3.44 per share, it is trading 72.3% below its 52-week high of $12.42 from November 2024. Investors who bought $1,000 worth of Krispy Kreme’s shares at the IPO in June 2021 would now be looking at an investment worth $163.57.
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