What Happened?

A number of stocks fell in the afternoon session after a report revealed that U.S. consumer confidence dropped for a second consecutive month, hitting a five-month low amid worries over inflation and the job market. Market volatility increased as a partisan standoff pushed the federal government closer to a shutdown. If lawmakers fail to reach a spending agreement, a shutdown would begin, furloughing thousands of federal workers. This prospect has weighed on investor sentiment, creating a 'risk-off' mood in the markets as traders brace for potential economic disruption. The political uncertainty adds a layer of caution for investors heading into the final day of the month. 

Adding to the weakness, a key report showed U.S. consumer confidence unexpectedly fell to a five-month low in September. The Conference Board's consumer confidence index slid to 94.2, a steeper drop than analysts had anticipated and its lowest reading since April. This downturn reflects growing pessimism among Americans about inflation and a weakening job market. Consumer confidence is a closely watched economic indicator as it gauges households' willingness to spend. A decline suggests that consumers may pull back on discretionary purchases, such as dining out or shopping for non-essential goods, which could negatively impact the future revenues and profits of companies in these 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 Facilities company AMC Entertainment (NYSE: AMC) fell 3%. Is now the time to buy AMC Entertainment? Access our full analysis report here, it’s free.
• Travel and Vacation Providers company Delta (NYSE: DAL) fell 2.8%. Is now the time to buy Delta? Access our full analysis report here, it’s free.
• Casino Operator company Caesars Entertainment (NASDAQ: CZR) fell 3.7%. Is now the time to buy Caesars Entertainment? Access our full analysis report here, it’s free.
• Travel and Vacation Providers company Target Hospitality (NASDAQ: TH) fell 3.8%. Is now the time to buy Target Hospitality? Access our full analysis report here, it’s free.
• Casino Operator company Wynn Resorts (NASDAQ: WYNN) fell 2.9%. Is now the time to buy Wynn Resorts? Access our full analysis report here, it’s free.

Zooming In On Target Hospitality (TH)

Target Hospitality’s shares are very volatile and have had 29 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 biggest move we wrote about over the last year was 7 months ago when the stock dropped 55.6% on the news that the company announced the U.S. government wants to terminate the existing Pecos Children's Center services agreement with its nonprofit partner immediately or by February 21, 2025. Because of this, the company is pulling its previously issued preliminary 2025 financial outlook. This creates uncertainty, and investors might be getting nervous about whether the company can meet its sales and profit targets.

Target Hospitality is down 14.2% since the beginning of the year, and at $8.31 per share, it is trading 23.5% below its 52-week high of $10.86 from January 2025. Investors who bought $1,000 worth of Target Hospitality’s shares 5 years ago would now be looking at an investment worth $6,811.

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