What Happened?
Shares of beauty, cosmetics, and personal care retailer Ulta Beauty (NASDAQ: ULTA) jumped 3.5% in the afternoon session after a tame inflation report boosted investor hopes for an interest rate cut from the Federal Reserve. The latest Consumer Price Index data showed the annual inflation rate held steady at 2.7%, reassuring investors who had feared that tariffs could lead to a spike in consumer prices. This milder-than-expected reading gives the Federal Reserve more flexibility to consider lowering interest rates, possibly as soon as next month. A potential rate cut could reduce borrowing costs for consumers and businesses, stimulating more spending and providing a significant boost for the retail industry. Adding to the optimism, reports of a 90-day tariff truce with China further eased concerns about future price pressures.
After the initial pop the shares cooled down to $514.87, up 3.2% from previous close.
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What Is The Market Telling Us
Ulta’s shares are not very volatile and have only had 8 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 12 months ago when the stock gained 15.1% on the news that Warren Buffett's Berkshire Hathaway revealed a stake of 690K shares of Ulta valued at ~$266 million in its Q2 2024 13-F filing.
Given the legendary investor's reputation for identifying quality opportunities in the stock market, the market is likely to read the information positively for the company's prospects in the near term. The sentiment was also supported by Walmart's strong earnings outperformance and sales outlook for the rest of the year, which indicated a healthy spending pattern for the U.S. consumer.
Ulta is up 20% since the beginning of the year, and at $514.87 per share, it is trading close to its 52-week high of $519.27 from July 2025. Investors who bought $1,000 worth of Ulta’s shares 5 years ago would now be looking at an investment worth $2,364.
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