What Happened?

A number of stocks jumped in the afternoon session after the latest Consumer Price Index (CPI) report showed inflation holding steady, bolstering investor optimism for a potential interest rate cut by the Federal Reserve. The data, which revealed that inflation remained at 2.7% for the year ending in July, was seen as a positive sign by investors. This stability increases the likelihood that the Federal Reserve might lower interest rates at its upcoming September meeting. Lower interest rates can stimulate the economy by making borrowing cheaper for both consumers and businesses, which often translates into higher consumer spending. This is particularly beneficial for the Consumer Discretionary sector, which includes companies selling non-essential goods and services like apparel, travel, and electronics.

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:

• Home Furnishings company Mohawk Industries (NYSE: MHK) jumped 3.4%. Is now the time to buy Mohawk Industries? Access our full analysis report here, it’s free.
• Travel and Vacation Providers company Wyndham (NYSE: WH) jumped 3.1%. Is now the time to buy Wyndham? Access our full analysis report here, it’s free.
• Travel and Vacation Providers company Travel + Leisure (NYSE: TNL) jumped 3.4%. Is now the time to buy Travel + Leisure? Access our full analysis report here, it’s free.
• Travel and Vacation Providers company Sabre (NASDAQ: SABR) jumped 5.4%. Is now the time to buy Sabre? Access our full analysis report here, it’s free.
• Leisure Products company YETI (NYSE: YETI) jumped 4%. Is now the time to buy YETI? Access our full analysis report here, it’s free.

Zooming In On Sabre (SABR)

Sabre’s shares are extremely volatile and have had 33 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 1 day ago when the stock gained 3.4% on the news that investment firm Bernstein upgraded the travel technology company to 'Outperform' from 'Market Perform', suggesting the market has become too pessimistic on its outlook. The upgrade comes even as Bernstein lowered its price target on the stock to $3.00 from $4.00. The move follows a significant plunge in Sabre's stock, which fell nearly 38% in a single day after a recent disappointing quarterly report that missed profit forecasts. However, Bernstein analysts believe the negative market reaction was overblown, stating the stock is now "oversold" and "too cheap." The firm argues that the market is incorrectly pricing in a structural decline for Sabre's core Global Distribution System (GDS) business. Bernstein sees a path for booking declines to stabilize and noted that the company has no major debt maturities until 2027, providing some financial stability.

Sabre is down 45% since the beginning of the year, and at $1.97 per share, it is trading 56.5% below its 52-week high of $4.52 from February 2025. Investors who bought $1,000 worth of Sabre’s shares 5 years ago would now be looking at an investment worth $233.37.

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