What Happened?
Shares of general merchandise retailer Target (NYSE: TGT) fell 4% in the afternoon session after the major indices continued to retreat (Nasdaq -1.5%, S&P 500 -1.2%) amid profit-taking and renewed concerns about tariffs. Investors reacted to a federal court ruling that most of President Trump's global tariffs were illegal, raising uncertainty over trade policy and the fiscal impact of potential refunds. Rising Treasury yields added to the pressure, with the 10-year climbing above 4.2% and the 30-year nearing 5%, intensifying worries about stretched equity valuations. September's historically weak track record for stocks further dampened sentiment, leaving traders cautious ahead of the jobs report later in the week and the Federal Reserve's upcoming rate decision.
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What Is The Market Telling Us
Target’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 previous big move we wrote about was 13 days ago when the stock dropped 7.6% on the news that the company reported mixed second quarter earnings. Traffic to its stores fell and gross margin slightly missed. Also, a new CEO was announced. On the other hand, revenue beat slightly, and full-year guidance was maintained. Overall, we think this was a mixed quarter. Investors were likely hoping for more, or were likely disappointed in the CEO announcement.
Target is down 32.7% since the beginning of the year, and at $92.38 per share, it is trading 42.5% below its 52-week high of $160.69 from October 2024. Investors who bought $1,000 worth of Target’s shares 5 years ago would now be looking at an investment worth $616.54.
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