What Happened?
A number of stocks jumped in the afternoon session after the latest Consumer Price Index (CPI) report showed inflation holding steady, bolstering investor optimism for a potential interest rate cut by the Federal Reserve. The data, which revealed that inflation remained at 2.7% for the year ending in July, was seen as a positive sign by investors. This stability increases the likelihood that the Federal Reserve might lower interest rates at its upcoming September meeting. Lower interest rates can stimulate the economy by making borrowing cheaper for both consumers and businesses, which often translates into higher consumer spending. This is particularly beneficial for the Consumer Discretionary sector, which includes companies selling non-essential goods and services like apparel, travel, and electronics.
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:
- Apparel and Accessories company Kontoor Brands (NYSE: KTB) jumped 4.6%. Is now the time to buy Kontoor Brands? Access our full analysis report here, it’s free.
- Apparel and Accessories company Oxford Industries (NYSE: OXM) jumped 3.6%. Is now the time to buy Oxford Industries? Access our full analysis report here, it’s free.
- Apparel and Accessories company Figs (NYSE: FIGS) jumped 4.7%. Is now the time to buy Figs? Access our full analysis report here, it’s free.
- Broadcasting company Gray Television (NYSE: GTN) jumped 11.7%. Is now the time to buy Gray Television? Access our full analysis report here, it’s free.
- Footwear company Steven Madden (NASDAQ: SHOO) jumped 6.3%. Is now the time to buy Steven Madden? Access our full analysis report here, it’s free.
Zooming In On Gray Television (GTN)
Gray Television’s shares are extremely volatile and have had 46 moves greater than 5% over the last year. But moves this big are rare even for Gray Television and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 1 day ago when the stock gained 19.4% on the news that multiple analysts raised their price targets on the stock, citing benefits from recent acquisitions and improvements to the company's balance sheet. The positive sentiment from Wall Street came from at least two firms. Benchmark raised its price target significantly to $9.00 from $7.00, maintaining a Buy rating. The firm's analyst noted that Gray's recent refinancing has 'completely revitalized' its balance sheet and that recent acquisitions were 'massively accretive and deleveraging.' Similarly, Wells Fargo increased its price target to $5.00 from $4.50, citing future benefits from deleveraging and free cash flow accretion tied to the company's mergers and acquisitions strategy. These upgrades followed Gray's announcement on August 8th that it would acquire television stations in ten markets from Allen Media Group.
Gray Television is up 71.1% since the beginning of the year, and at $5.75 per share, it is trading close to its 52-week high of $5.95 from November 2024. Investors who bought $1,000 worth of Gray Television’s shares 5 years ago would now be looking at an investment worth $367.36.
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