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:

• Casino Operator company Wynn Resorts (NASDAQ: WYNN) jumped 3%. Is now the time to buy Wynn Resorts? Access our full analysis report here, it’s free.
• Apparel and Accessories company Under Armour (NYSE: UAA) jumped 3.1%. Is now the time to buy Under Armour? Access our full analysis report here, it’s free.
• Broadcasting company AMC Networks (NASDAQ: AMCX) jumped 3.6%. Is now the time to buy AMC Networks? Access our full analysis report here, it’s free.
• Gaming Solutions company Light & Wonder (NASDAQ: LNW) jumped 3.1%. Is now the time to buy Light & Wonder? Access our full analysis report here, it’s free.
• Travel and Vacation Providers company Carnival (NYSE: CCL) jumped 3%. Is now the time to buy Carnival? Access our full analysis report here, it’s free.

Zooming In On AMC Networks (AMCX)

AMC Networks’s shares are extremely volatile and have had 35 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 4 days ago when the stock gained 19% on the news that the company reported second-quarter financial results that surpassed Wall Street expectations for both revenue and earnings. The company reported second-quarter revenue of $600 million and adjusted earnings of $0.69 per share, beating analyst forecasts of $586 million and $0.54 per share, respectively. This positive surprise came despite a 4.1% year-over-year decline in total sales, highlighting strength in other areas of the business. The main drivers for the quarter were a 12% increase in streaming revenue, which rose to $169 million, and robust performance in content licensing. 

Adding to investor optimism, AMC Networks raised its full-year free cash flow outlook to approximately $250 million. The strong results in streaming and the improved cash flow guidance signal progress in the company's strategy, overshadowing declines in traditional advertising revenue.

AMC Networks is down 31.2% since the beginning of the year, and at $6.86 per share, it is trading 35.9% below its 52-week high of $10.70 from August 2024. Investors who bought $1,000 worth of AMC Networks’s shares 5 years ago would now be looking at an investment worth $274.38.

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