What Happened?
A number of stocks fell in the afternoon session after a hotter-than-expected wholesale inflation report fueled concerns about slowing consumer spending. The market was rattled by a Labor Department report showing the Producer Price Index (PPI), a measure of wholesale inflation, jumped 0.9% in July, significantly exceeding economists' expectations of a 0.2% rise. This was the largest monthly increase since March 2022, reigniting worries that businesses will be forced to pass higher costs on to consumers, who are already showing signs of price sensitivity. This inflation data has fanned concerns that U.S. tariffs on imported goods could start to translate into higher prices for shoppers. The inflation report landed amid growing evidence of consumer caution, with recent reports highlighting that shoppers are cutting back on non-essential spending, seeking out sales, and trading down to cheaper brands.
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:
- Sports & Outdoor Equipment Retailer company Sportsman's Warehouse (NASDAQ: SPWH) fell 4.6%. Is now the time to buy Sportsman's Warehouse? Access our full analysis report here, it’s free.
- Apparel Retailer company Lululemon (NASDAQ: LULU) fell 3%. Is now the time to buy Lululemon? Access our full analysis report here, it’s free.
- Home Furniture Retailer company Williams-Sonoma (NYSE: WSM) fell 3.1%. Is now the time to buy Williams-Sonoma? Access our full analysis report here, it’s free.
- Beauty and Cosmetics Retailer company Bath and Body Works (NYSE: BBWI) fell 3%. Is now the time to buy Bath and Body Works? Access our full analysis report here, it’s free.
- Vehicle Retailer company America's Car-Mart (NASDAQ: CRMT) fell 3.1%. Is now the time to buy America's Car-Mart? Access our full analysis report here, it’s free.
Zooming In On Sportsman's Warehouse (SPWH)
Sportsman's Warehouse’s shares are extremely volatile and have had 78 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 10 days ago when the stock gained 3.1% on the news that markets rebounded following a sharp sell-off in the previous trading session as a weaker-than-expected July jobs report fueled investor hopes for a potential interest rate cut. The U.S. economy added only 73,000 jobs in July, falling well short of the 110,000 expected by economists. This disappointing data has led to a dramatic shift in market sentiment regarding the Federal Reserve's next move. According to the CME FedWatch Tool, the probability of a September interest rate cut has surged from around 40% to over 80%. Lower interest rates generally stimulate the economy by making borrowing cheaper for consumers. This can lead to increased spending on discretionary items, such as apparel and home goods, which directly benefits consumer retail companies. The prospect of more accommodative monetary policy is therefore boosting investor confidence in the sector's outlook.
Sportsman's Warehouse is up 12.8% since the beginning of the year, but at $2.90 per share, it is still trading 30.3% below its 52-week high of $4.16 from June 2025. Investors who bought $1,000 worth of Sportsman's Warehouse’s shares 5 years ago would now be looking at an investment worth $174.91.
Unless you’ve been living under a rock, it should be obvious by now that generative AI is going to have a huge impact on how large corporations do business. While Nvidia and AMD are trading close to all-time highs, we prefer a lesser-known (but still profitable) semiconductor stock benefiting from the rise of AI. Click here to access our free report on our favorite semiconductor growth story.
