What Happened?
A number of stocks fell in the afternoon session after the major indices pulled back (Nasdaq -1.3%, S&P 500 - 1.4%) as Treasury yields rose, reflecting market anxiety over a draft federal budget that could worsen the already wide US fiscal deficit. A poor auction for 20-year U.S. Treasury bonds further raised concerns, as weak demand implies investors are becoming more cautious about holding long-dated U.S. debt.
As a reminder, the driver of a stock's value is the sum of its future cash flows discounted back to today. With lower interest rates (yields), investors can apply higher valuations to their stocks; when yields rise, that math works in reverse.
Adding to the cautious mood were earnings results from retail giants Target and Lowe's, both of which reported weak earnings that missed expectations, pointing to a potential slowdown in consumer spending and further weighing on sentiment.
Lastly, some influential voices such as Jamie Dimon (JPMorgan) and Steve Cohen (Point72) made cautious comments about the market, which can sometimes become self-fulfilling prophecies as investors increase their cautiousness and skittishness.
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:
- Consumer Electronics company Sonos (NASDAQ: SONO) fell 5.1%. Is now the time to buy Sonos? Access our full analysis report here, it’s free.
- Real Estate Services company CBRE (NYSE: CBRE) fell 5.7%. Is now the time to buy CBRE? Access our full analysis report here, it’s free.
- Real Estate Services company RE/MAX (NYSE: RMAX) fell 5.2%. Is now the time to buy RE/MAX? Access our full analysis report here, it’s free.
- Construction and Maintenance Services company WillScot Mobile Mini (NASDAQ: WSC) fell 5.4%. Is now the time to buy WillScot Mobile Mini? Access our full analysis report here, it’s free.
- Home Construction Materials company Builders FirstSource (NYSE: BLDR) fell 5.1%. Is now the time to buy Builders FirstSource? Access our full analysis report here, it’s free.
Zooming In On CBRE (CBRE)
CBRE’s shares are not very volatile and have only had 7 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 10 months ago when the stock gained 12.1% on the news that the company reported strong second-quarter earnings results. CBRE beat analysts' revenue expectations. The topline benefited from meaningful contributions from all major operating segments. Its EPS also outperformed Wall Street's estimates. Overall, we think this was a really good quarter that should please shareholders.
CBRE is down 7% since the beginning of the year, and at $120.87 per share, it is trading 17.8% below its 52-week high of $147.13 from February 2025. Investors who bought $1,000 worth of CBRE’s shares 5 years ago would now be looking at an investment worth $2,966.
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