What Happened?
A number of stocks fell in the afternoon session after a surprisingly weak August jobs report fueled concerns of a cooling economy but also raised expectations for Federal Reserve interest rate cuts.
The U.S. economy added a mere 22,000 jobs last month, a significant miss from the 75,000 analysts had projected, according to the Bureau of Labor Statistics. This figure represents a notable slowdown in the labor market. While such a sharp decline in job growth can be a bearish signal for the economy, investors are now betting it will force the Federal Reserve's hand. As noted by one economist, the market's initial reaction seems to be more focused on the increased likelihood of Fed rate cuts rather than the immediate concerns about economic cooling, with a September cut now seen as fully priced in.
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:
- Apparel and Accessories company G-III (NASDAQ:GIII) fell 5.8%. Is now the time to buy G-III? Access our full analysis report here, it’s free.
- Apparel and Accessories company Under Armour (NYSE:UAA) fell 2.6%. Is now the time to buy Under Armour? Access our full analysis report here, it’s free.
Zooming In On G-III (GIII)
G-III’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 24 days ago when the stock gained 3.5% on the news that 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.
G-III is down 18.4% since the beginning of the year, and at $26.12 per share, it is trading 27.6% below its 52-week high of $36.10 from December 2024. Investors who bought $1,000 worth of G-III’s shares 5 years ago would now be looking at an investment worth $2,146.
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