What Happened?

A number of stocks jumped in the afternoon session after the release of stronger-than-expected consumer spending data for August, which pointed to a resilient economy. 

The Bureau of Economic Analysis reported that personal spending rose 0.6% last month, beating estimates and marking the third consecutive month of solid gains. After adjusting for inflation, real spending still increased by a healthy 0.4%. 

This robust consumer activity was accompanied by an in-line inflation report. The core Personal Consumption Expenditures (PCE) price index, the Federal Reserve's preferred inflation gauge, met expectations with a 0.2% monthly increase. Investors interpreted the news as a positive sign that the Fed can support the economy without risking runaway inflation. The positive sentiment helped the major indices claw back some of the losses from a recent three-day slide, with stocks rising across various sectors.

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:

• Leisure Products company Harley-Davidson (NYSE: HOG) jumped 3%. Is now the time to buy Harley-Davidson? Access our full analysis report here, it’s free.
• Specialized Consumer Services company 1-800-FLOWERS (NASDAQ: FLWS) jumped 2.6%. Is now the time to buy 1-800-FLOWERS? Access our full analysis report here, it’s free.

Zooming In On Harley-Davidson (HOG)

Harley-Davidson’s shares are somewhat volatile and have had 14 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 3 days ago when the stock gained 2.1% on the news that the company confirmed it would not raise the price of its X440 motorcycle in India, even with a new tax. 

Harley-Davidson decided to absorb the cost from a revised GST (Goods and Services Tax) framework, which placed motorcycles with engines over 350cc in a higher tax bracket. This move kept the X440's price steady and boosted its competitive edge, especially after a rival bike that shared its platform was taken off the market. The decision underscored the company's focus on the key Indian market, where the X440 has seen strong sales. 

Adding to the positive news, reports also surfaced about the company's plans to bring more entry-level models to other emerging markets, like the Philippines, hinting at a broader growth strategy. The company also rolled out its new 2025 Cruiser lineup and a new 2026 Night Rod model, showing it was also refreshing its classic offerings.

Harley-Davidson is down 1.5% since the beginning of the year, and at $29 per share, it is trading 26.3% below its 52-week high of $39.37 from September 2024. Investors who bought $1,000 worth of Harley-Davidson’s shares 5 years ago would now be looking at an investment worth $1,213.

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