What Happened?
A number of stocks fell in the afternoon session after investors paused a record-setting rally amid uncertainty from the ongoing U.S. government shutdown.
The S&P 500 and Nasdaq pulled back from all-time highs as the shutdown entered its second week, creating a data vacuum for investors. The political impasse has halted the release of vital economic indicators, including key reports on jobs and inflation. Without this crucial information, it becomes more difficult for the Federal Reserve and market participants to accurately assess the nation's economic health. This uncertainty prompted traders to take profits following a prolonged period of gains. In addition, Jamie Dimon raised concerns about a market correction. He added, “I would give it a higher probability than I think is probably priced in the market and by others, so if the market is pricing in 10%, I would ... say it’s more like 30%.” Dimon's remarks are closely watched given his influence as head of one of the nation's largest banks.
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 American Outdoor Brands (NASDAQ: AOUT) fell 3%. Is now the time to buy American Outdoor Brands? Access our full analysis report here, it’s free for active Edge members.
- Real Estate Services company Opendoor (NASDAQ: OPEN) fell 2.9%. Is now the time to buy Opendoor? Access our full analysis report here, it’s free for active Edge members.
- Apparel and Accessories company PVH (NYSE: PVH) fell 4.4%. Is now the time to buy PVH? Access our full analysis report here, it’s free for active Edge members.
- Broadcasting company Paramount (NASDAQ: PSKY) fell 2.7%. Is now the time to buy Paramount? Access our full analysis report here, it’s free for active Edge members.
- Broadcasting company Gray Television (NYSE: GTN) fell 3.7%. Is now the time to buy Gray Television? Access our full analysis report here, it’s free for active Edge members.
Zooming In On PVH (PVH)
PVH’s shares are somewhat volatile and have had 13 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 2 days ago when the stock dropped 3% on the news that a confluence of negative economic data pointed to a weak economy. The latest Survey of Consumer Expectations from the New York Fed revealed that households' short-term inflation expectations rose, while their outlook on the labor market deteriorated. Consumers expressed greater concern about potential job losses and expected lower earnings growth, factors that directly impact discretionary spending. Adding to the unease, Chief Economist at Moody’s Analytics, Mark Zandi, warned that 22 states demonstrated clear signs of a recession, placing the broader U.S. economy in a precarious position. The U.S. government shutdown further dampened sentiment, threatening to weigh on incomes and purchasing power.
PVH is down 23% since the beginning of the year, and at $80.74 per share, it is trading 28.5% below its 52-week high of $112.86 from December 2024. Investors who bought $1,000 worth of PVH’s shares 5 years ago would now be looking at an investment worth $1,221.
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