What Happened?
A number of stocks fell in the afternoon session after a report revealed that U.S. consumer confidence dropped for a second consecutive month, hitting a five-month low amid worries over inflation and the job market.
Market volatility increased as a partisan standoff pushed the federal government closer to a shutdown. If lawmakers fail to reach a spending agreement, a shutdown would begin, furloughing thousands of federal workers. This prospect has weighed on investor sentiment, creating a 'risk-off' mood in the markets as traders brace for potential economic disruption. The political uncertainty adds a layer of caution for investors heading into the final day of the month.
Adding to the weakness, a key report showed U.S. consumer confidence unexpectedly fell to a five-month low in September. The Conference Board's consumer confidence index slid to 94.2, a steeper drop than analysts had anticipated and its lowest reading since April. This downturn reflects growing pessimism among Americans about inflation and a weakening job market. Consumer confidence is a closely watched economic indicator as it gauges households' willingness to spend. A decline suggests that consumers may pull back on discretionary purchases, such as dining out or shopping for non-essential goods, which could negatively impact the future revenues and profits of companies in these 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:
- Leisure Products company Harley-Davidson (NYSE: HOG) fell 3%. Is now the time to buy Harley-Davidson? Access our full analysis report here, it’s free.
- Specialized Consumer Services company 1-800-FLOWERS (NASDAQ: FLWS) fell 4.6%. Is now the time to buy 1-800-FLOWERS? Access our full analysis report here, it’s free.
- Real Estate Services company eXp World (NASDAQ: EXPI) fell 3.6%. Is now the time to buy eXp World? Access our full analysis report here, it’s free.
- Real Estate Services company The Real Brokerage (NASDAQ: REAX) fell 4.1%. Is now the time to buy The Real Brokerage? Access our full analysis report here, it’s free.
- Home Furnishings company Purple (NASDAQ: PRPL) fell 4.5%. Is now the time to buy Purple? Access our full analysis report here, it’s free.
Zooming In On 1-800-FLOWERS (FLWS)
1-800-FLOWERS’s shares are extremely volatile and have had 35 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 4 days ago when the stock gained 2.6% after the release of stronger-than-expected consumer spending data for August, which pointed to a resilient economy. The Bureau of Economic Analysis reported that personal spending rose 0.6% last month, beating estimates and marking the third consecutive month of solid gains. After adjusting for inflation, real spending still increased by a healthy 0.4%. This robust consumer activity was accompanied by an in-line inflation report. The core Personal Consumption Expenditures (PCE) price index, the Federal Reserve's preferred inflation gauge, met expectations with a 0.2% monthly increase. 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.
1-800-FLOWERS is down 40.7% since the beginning of the year, and at $4.63 per share, it is trading 49% below its 52-week high of $9.09 from February 2025. Investors who bought $1,000 worth of 1-800-FLOWERS’s shares 5 years ago would now be looking at an investment worth $185.79.
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