What Happened?
A number of stocks fell in the afternoon session after markets continued to decline, as investors grew cautious ahead of a key speech by Federal Reserve Chair Jerome Powell.
The move came as U.S. equity markets recorded a fifth consecutive day of losses for major indexes like the S&P 500, with technology stocks experiencing the largest declines. Investors have grown wary that the sharp rally in the tech sector since April may have advanced too far. The market-wide caution is largely driven by the upcoming Jackson Hole symposium, a meeting of central bankers, where traders are anxiously awaiting Fed Chair Powell's speech on Friday for guidance on the future path of interest rates.
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:
- Home Furnishings company Lovesac (NASDAQ: LOVE) fell 3.4%. Is now the time to buy Lovesac? Access our full analysis report here, it’s free.
- Safety & Security Services company GEO Group (NYSE: GEO) fell 3.3%. Is now the time to buy GEO Group? Access our full analysis report here, it’s free.
- Internet of Things company SmartRent (NYSE: SMRT) fell 3.8%. Is now the time to buy SmartRent? Access our full analysis report here, it’s free.
- Leisure Facilities company Xponential Fitness (NYSE: XPOF) fell 5.6%. Is now the time to buy Xponential Fitness? Access our full analysis report here, it’s free.
- Online Marketplace company The RealReal (NASDAQ: REAL) fell 6.7%. Is now the time to buy The RealReal? Access our full analysis report here, it’s free.
Zooming In On The RealReal (REAL)
The RealReal’s shares are extremely volatile and have had 66 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 1 day ago when the stock dropped 3.7% on the news that the major indices continued to pull back, with technology stocks accounting for most of the market's largest decliners. A key reason for this trend is that much of the recent market gains were concentrated in the "AI trade," which includes these large technology and semiconductor companies. So this could also mean that some investors are locking in some gains ahead of more definitive feedback from the Fed.
Despite the downturn, some analysts viewed this as an opportunity to own some of the "Core AI winners." Dan Ives of Wedbush Securities commented, "In our view, the tech bull cycle will be well intact for at least another 2-3 years, given the trillions being spent on AI infrastructure/software/chips/power/apps looking ahead. This remains our tech playbook and investor roadmap." Additionally, mixed earnings reports from retailers, such as Target, have added to the market's weakness. Investors are closely monitoring these reports for insights into the broader economic health and the potential impact of new tariffs on inflation.
The RealReal is down 22.6% since the beginning of the year, and at $7.62 per share, it is trading 31.9% below its 52-week high of $11.18 from December 2024. Investors who bought $1,000 worth of The RealReal’s shares 5 years ago would now be looking at an investment worth $430.96.
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