What Happened?

A number of stocks fell in the afternoon session after a confluence of negative economic data pointed to a weak economy. The latest Survey of Consumer Expectations from the New York Fed revealed that households' short-term inflation expectations rose, while their outlook on the labor market deteriorated. Consumers expressed greater concern about potential job losses and expected lower earnings growth, factors that directly impact discretionary spending. Adding to the unease, Chief Economist at Moody’s Analytics, Mark Zandi, warned that 22 states demonstrated clear signs of a recession, placing the broader U.S. economy in a precarious position. The U.S. government shutdown further dampened sentiment, threatening to weigh on incomes and purchasing power.

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:

• Travel and Vacation Providers company Marriott Vacations (NYSE: VAC) fell 4.7%. Is now the time to buy Marriott Vacations? Access our full analysis report here, it’s free for active Edge members.
• Leisure Facilities company Xponential Fitness (NYSE: XPOF) fell 2.5%. Is now the time to buy Xponential Fitness? Access our full analysis report here, it’s free for active Edge members.
• Specialized Consumer Services company WeightWatchers (NASDAQ: WW) fell 4.4%. Is now the time to buy WeightWatchers? Access our full analysis report here, it’s free for active Edge members.
• Consumer Electronics company Peloton (NASDAQ: PTON) fell 11.5%. Is now the time to buy Peloton? Access our full analysis report here, it’s free for active Edge members.
• Footwear company Caleres (NYSE: CAL) fell 5.8%. Is now the time to buy Caleres? Access our full analysis report here, it’s free for active Edge members.

Zooming In On Peloton (PTON)

Peloton’s shares are extremely volatile and have had 67 moves greater than 5% over the last year. But moves this big are rare even for Peloton and indicate this news significantly impacted the market’s perception of the business.

The previous big move we wrote about was 6 days ago when the stock dropped 8.7% on the news that the company announced a major product overhaul focused on artificial intelligence and higher prices, which failed to impress investors. 

Peloton unveiled a sweeping revamp of its portfolio, introducing an AI and computer vision system called Peloton IQ for personalized guidance. The relaunch also included new products and significant price increases across its equipment and monthly membership fees. For instance, the Bike+ price went up by $200, the base treadmill model increased by $300, and the Tread+ saw a $700 price hike. The monthly membership cost also rose by $5. While the stock saw a brief climb in pre-market trading following the news, the gains reversed sharply after the market opened, indicating that investors were ultimately unimpressed with the company's new strategy.

Peloton is down 16.6% since the beginning of the year, and at $7.37 per share, it is trading 30.3% below its 52-week high of $10.57 from December 2024. Investors who bought $1,000 worth of Peloton’s shares 5 years ago would now be looking at an investment worth $62.97.

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