What Happened?
A number of stocks jumped in the afternoon session after comments from a key Federal Reserve official boosted investor optimism for a potential interest rate cut.
New York Federal Reserve President John Williams, a voting member of the rate-setting committee, suggested he sees room for "further policy easing," which sent a strong signal to the markets. Following his remarks, the probability of a December rate cut, as measured by the CME FedWatch Tool, surged from 39% to 71%. Lower interest rates can stimulate the economy by making borrowing cheaper for both consumers and businesses, which often translates to increased consumer spending. This prospect is outweighing recent reports of lower consumer confidence, as investors bet that a more accommodative Fed policy will support retailers through the holiday season.
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 Retailer company Victoria's Secret (NYSE:VSCO) jumped 8.4%. Is now the time to buy Victoria's Secret? Access our full analysis report here, it’s free for active Edge members.
- Vehicle Retailer company America's Car-Mart (NASDAQ:CRMT) jumped 9.8%. Is now the time to buy America's Car-Mart? Access our full analysis report here, it’s free for active Edge members.
- Sports & Outdoor Equipment Retailer company Sportsman's Warehouse (NASDAQ:SPWH) jumped 8.5%. Is now the time to buy Sportsman's Warehouse? Access our full analysis report here, it’s free for active Edge members.
Zooming In On America's Car-Mart (CRMT)
America's Car-Mart’s shares are extremely volatile and have had 32 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 biggest move we wrote about over the last year was 3 months ago when the stock dropped 22.2% on the news that the company reported disappointing second-quarter results that widely missed analyst expectations. The used vehicle retailer posted revenue of $341.3 million, a decrease of 1.5% compared to the same period last year and short of Wall Street estimates. The more significant concern for investors was the company's bottom-line performance. Car-Mart reported a loss of $0.69 per share, a stark contrast to analysts' forecasts for a profit of $0.83 per share. This loss also widened significantly from the $0.15 per share loss reported in the prior-year quarter. Additionally, same-store sales, which measure performance at established locations, fell by 4.1% year on year, highlighting shrinking demand.
America's Car-Mart is down 59.4% since the beginning of the year, and at $20.23 per share, it is trading 67.4% below its 52-week high of $62.05 from July 2025. Investors who bought $1,000 worth of America's Car-Mart’s shares 5 years ago would now be looking at an investment worth $194.69.
The 1999 book Gorilla Game predicted Microsoft and Apple would dominate tech before it happened. Its thesis? Identify the platform winners early. Today, enterprise software companies embedding generative AI are becoming the new gorillas. Click here for access to our special report that reveals one profitable leader already riding this wave.