What Happened?
A number of stocks jumped in the afternoon session after a key inflation data (PCE) aligned with forecasts, bolstering hopes for continued interest rate cuts from the Federal Reserve.
The Personal Consumption Expenditures (PCE) price index, the central bank's preferred gauge of inflation, showed a slight year-over-year increase in August but did not surprise economists. This report was met with relief on Wall Street, as it suggests inflationary pressures remain contained, giving the Federal Reserve more leeway to continue its monetary easing policy.
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:
- Traditional Fast Food company Domino's (NASDAQ: DPZ) jumped 4.3%. Is now the time to buy Domino's? Access our full analysis report here, it’s free.
- Sit-Down Dining company Cracker Barrel (NASDAQ: CBRL) jumped 3.7%. Is now the time to buy Cracker Barrel? Access our full analysis report here, it’s free.
- Sit-Down Dining company The ONE Group (NASDAQ: STKS) jumped 4%. Is now the time to buy The ONE Group? Access our full analysis report here, it’s free.
- Traditional Fast Food company Krispy Kreme (NASDAQ: DNUT) jumped 3.5%. Is now the time to buy Krispy Kreme? Access our full analysis report here, it’s free.
- Sit-Down Dining company Red Robin (NASDAQ: RRGB) jumped 2.8%. Is now the time to buy Red Robin? Access our full analysis report here, it’s free.
Zooming In On Domino's (DPZ)
Domino’s shares are not very volatile and have only had 6 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was about 1 month ago when the stock gained 3.2% on the news that Guggenheim raised its price target on the stock to $490 from $485.
While the investment firm increased its price outlook, it maintained a "Neutral" rating on the shares. The move signals a slightly more optimistic valuation for the pizza chain from the analyst, even without a full ratings upgrade. This adjustment comes amid a broader, more positive consensus from Wall Street. According to data from FactSet, the average analyst rating for Domino's is "overweight," with a mean price target of $513.70, suggesting that other analysts see more potential upside in the stock.
Domino's is up 1.3% since the beginning of the year, but at $440.40 per share, it is still trading 11.5% below its 52-week high of $497.52 from May 2025. Investors who bought $1,000 worth of Domino’s shares 5 years ago would now be looking at an investment worth $1,045.
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