What Happened?
A number of stocks fell in the afternoon session after the major indices continued to retreat (Nasdaq -1.5%, S&P 500 -1.2%) amid profit-taking and renewed concerns about tariffs.
Investors reacted to a federal court ruling that most of President Trump's global tariffs were illegal, raising uncertainty over trade policy and the fiscal impact of potential refunds. Rising Treasury yields added to the pressure, with the 10-year climbing above 4.2% and the 30-year nearing 5%, intensifying worries about stretched equity valuations. September's historically weak track record for stocks further dampened sentiment, leaving traders cautious ahead of the jobs report later in the week and the Federal Reserve's upcoming rate decision.
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:
- Analog Semiconductors company Monolithic Power Systems (NASDAQ: MPWR) fell 2.3%. Is now the time to buy Monolithic Power Systems? Access our full analysis report here, it’s free.
- Consumer Subscription company Roku (NASDAQ: ROKU) fell 1.8%. Is now the time to buy Roku? Access our full analysis report here, it’s free.
- Apparel and Accessories company Stitch Fix (NASDAQ: SFIX) fell 2.9%. Is now the time to buy Stitch Fix? Access our full analysis report here, it’s free.
- Sales Software company Freshworks (NASDAQ: FRSH) fell 2.5%. Is now the time to buy Freshworks? Access our full analysis report here, it’s free.
- Analog Semiconductors company Power Integrations (NASDAQ: POWI) fell 2.6%. Is now the time to buy Power Integrations? Access our full analysis report here, it’s free.
Zooming In On Stitch Fix (SFIX)
Stitch Fix’s shares are extremely volatile and have had 47 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 12 days ago when the stock dropped 3.4% on the news that 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.
Stitch Fix is up 17.8% since the beginning of the year, but at $5.15 per share, it is still trading 22.5% below its 52-week high of $6.64 from December 2024. Investors who bought $1,000 worth of Stitch Fix’s shares 5 years ago would now be looking at an investment worth $199.69.
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