What Happened?
Shares of shoe and apparel company Steven Madden (NASDAQ: SHOO) jumped 4.1% in the afternoon session after a broad market rally following comments from Federal Reserve Chair Jerome Powell suggesting potential interest rate cuts, coupled with strong retail sales data. The broader market surged after Federal Reserve Chair Jerome Powell indicated that interest rates could be cut in the coming months, sending the Dow Jones, S&P 500, and Nasdaq significantly higher. This optimistic sentiment provided a lift to equities across the board.
After the initial pop the shares cooled down to $28.40, up 4.7% from previous close.
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What Is The Market Telling Us
Steven Madden’s shares are very volatile and have had 20 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 10 days ago when the stock gained 6.3% on the news that 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.
Steven Madden is down 32.3% since the beginning of the year, and at $28.40 per share, it is trading 42.9% below its 52-week high of $49.70 from September 2024. Investors who bought $1,000 worth of Steven Madden’s shares 5 years ago would now be looking at an investment worth $1,363.
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