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:

• Real Estate Services company The Real Brokerage (NASDAQ: REAX) fell 3.3%. Is now the time to buy The Real Brokerage? Access our full analysis report here, it’s free for active Edge members.
• Real Estate Services company RE/MAX (NYSE: RMAX) fell 3.4%. Is now the time to buy RE/MAX? Access our full analysis report here, it’s free for active Edge members.
• Leisure Facilities company European Wax Center (NASDAQ: EWCZ) fell 3.4%. Is now the time to buy European Wax Center? Access our full analysis report here, it’s free for active Edge members.
• Leisure Products company American Outdoor Brands (NASDAQ: AOUT) fell 3.1%. Is now the time to buy American Outdoor Brands? Access our full analysis report here, it’s free for active Edge members.
• Apparel and Accessories company PVH (NYSE: PVH) fell 3%. Is now the time to buy PVH? Access our full analysis report here, it’s free for active Edge members.

Zooming In On RE/MAX (RMAX)

RE/MAX’s shares are quite volatile and have had 18 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 15 days ago when the stock gained 2.6% on the news that investor sentiment in the real estate services sector improved after news broke that competitor Compass Inc. planned to combine with Anywhere Real Estate. 

The all-stock deal created a major player in the residential real estate field with a combined enterprise value of around $10 billion. The transaction valued Anywhere Real Estate at $4.2 billion, a 21% premium. Such a significant merger often suggests strength and potential growth within an industry, which can lift the stocks of related companies like RE/MAX. The positive move also came as the broader real estate services sector showed strong performance, with share prices having climbed significantly on average since the most recent earnings season.

RE/MAX is down 18.4% since the beginning of the year, and at $8.44 per share, it is trading 39.9% below its 52-week high of $14.04 from November 2024. Investors who bought $1,000 worth of RE/MAX’s shares 5 years ago would now be looking at an investment worth $240.30.

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