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:

• Home Furnishings company Purple (NASDAQ: PRPL) jumped 9%. Is now the time to buy Purple? Access our full analysis report here, it’s free.
• Travel and Vacation Providers company United Airlines (NASDAQ: UAL) jumped 9.4%. Is now the time to buy United Airlines? Access our full analysis report here, it’s free.
• Footwear company Genesco (NYSE: GCO) jumped 5.2%. Is now the time to buy Genesco? Access our full analysis report here, it’s free.
• Footwear company Caleres (NYSE: CAL) jumped 7.5%. Is now the time to buy Caleres? Access our full analysis report here, it’s free.
• Apparel and Accessories company VF Corp (NYSE: VFC) jumped 3.2%. Is now the time to buy VF Corp? Access our full analysis report here, it’s free.

Zooming In On United Airlines (UAL)

United Airlines’s shares are very volatile and have had 25 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 about 1 month ago when the stock gained 13.1% after rival Delta Air Lines reported strong second-quarter earnings and reinstated its full-year guidance, boosting sentiment across the airline sector. The positive momentum comes after Delta (DAL) announced earnings surpassing analyst expectations. More importantly, Delta reinstated its full-year profit forecast, projecting earnings per share between $5.25 and $6.25, signaling confidence in sustained travel demand. Delta's strong performance and optimistic outlook are being interpreted by investors as a healthy sign for the entire airline industry. The news suggests that consumer demand for travel remains robust despite economic uncertainties. This positive industry-wide signal has lifted shares of other major carriers, including United, as investors anticipate they may also report strong results.

United Airlines is up 2.8% since the beginning of the year, but at $98.12 per share, it is still trading 11.2% below its 52-week high of $110.52 from January 2025. Investors who bought $1,000 worth of United Airlines’s shares 5 years ago would now be looking at an investment worth $2,695.

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