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:

• Specialized Consumer Services company Matthews (NASDAQ: MATW) jumped 3.1%. Is now the time to buy Matthews? Access our full analysis report here, it’s free.
• Leisure Facilities company Dave & Buster's (NASDAQ: PLAY) jumped 7.8%. Is now the time to buy Dave & Buster's? Access our full analysis report here, it’s free.
• Travel and Vacation Providers company American Airlines (NASDAQ: AAL) jumped 10.2%. Is now the time to buy American Airlines? Access our full analysis report here, it’s free.
• Travel and Vacation Providers company Delta (NYSE: DAL) jumped 8.3%. Is now the time to buy Delta? Access our full analysis report here, it’s free.
• Apparel and Accessories company PVH (NYSE: PVH) jumped 3.1%. Is now the time to buy PVH? Access our full analysis report here, it’s free.

Zooming In On American Airlines (AAL)

American Airlines’s shares are very volatile and have had 20 moves greater than 5% over the last year. But moves this big are rare even for American Airlines and indicate this news significantly impacted the market’s perception of the business.

The biggest move we wrote about over the last year was 4 months ago when the stock gained 18.9% on the news that markets rallied sharply on news that President Trump announced a 90-day tariff pause. Reciprocal tariffs were also dropped to 10% for most countries, sparking renewed optimism amid ongoing trade talks. The major stock indices rose as investors, growing impatient of seemingly irrational tariff actions, welcomed the pause as a sign of a more measured path forward. However, Trump was quick to note that China was not part of the pause. Instead, he prepared to raise tariffs on Chinese goods to 125% after China announced retaliatory tariffs on US imports. This tough stance on China stood in sharp contrast to the softer tone toward others. In a week marked by growing uncertainty, this news eased some of the pressure. The questions remain whether we are out of the woods and can sustain the rally or not.

American Airlines is down 24.8% since the beginning of the year, and at $12.79 per share, it is trading 31.5% below its 52-week high of $18.66 from January 2025. Investors who bought $1,000 worth of American Airlines’s shares 5 years ago would now be looking at an investment worth $944.24.

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