What Happened?
Shares of outdoor lifestyle and equipment company Clarus (NASDAQ: CLAR) fell 2.8% 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. Is now the time to buy Clarus? Access our full analysis report here.
What Is The Market Telling Us
Clarus’s shares are very volatile and have had 21 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 7 days ago when the stock dropped 3.1% on the news that fresh economic data revealed a significant drop in consumer confidence, stoking fears of a slowdown in household spending.
The pivotal event influencing market sentiment was the release of the Conference Board's September Consumer Confidence Index, which fell to 94.2, its lowest reading since April. This drop was primarily driven by growing pessimism among Americans regarding the job market and persistent inflation concerns. Economists noted that this erosion in confidence could directly translate into reduced spending on non-essential items. Compounding the negative sentiment, the housing market showed further signs of cooling, with home price growth slowing. Furthermore, the looming threat of a U.S. government shutdown added another layer of uncertainty, prompting investors to pull back from sectors reliant on robust consumer spending.
Clarus is down 28.4% since the beginning of the year, and at $3.27 per share, it is trading 36.9% below its 52-week high of $5.18 from December 2024. Investors who bought $1,000 worth of Clarus’s shares 5 years ago would now be looking at an investment worth $215.56.
Here at StockStory, we certainly understand the potential of thematic investing. Diverse winners from Microsoft (MSFT) to Alphabet (GOOG), Coca-Cola (KO) to Monster Beverage (MNST) could all have been identified as promising growth stories with a megatrend driving the growth. So, in that spirit, we’ve identified a relatively under-the-radar profitable growth stock benefiting from the rise of AI, available to you FREE via this link.
