What Happened?

A number of stocks jumped in the afternoon session after the White House announced a one-year delay on planned tariff hikes for many home goods, including furniture and cabinets. 

The decision kept the current 25% tariff rate in place, averting a scheduled increase to as high as 50% for items like kitchen cabinets and bathroom vanities that was set to take effect on New Year's Day. This move provided significant relief for retailers, as higher tariffs typically lead to increased costs. 

Companies would have faced the difficult choice of absorbing the extra expense, which hurts profitability, or passing it on to customers through higher prices, which could reduce sales. The news was met with investor optimism, sparking a rally in the sector.

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:

• Footwear Retailer company Boot Barn (NYSE: BOOT) jumped 5.3%. Is now the time to buy Boot Barn? Access our full analysis report here, it’s free for active Edge members.
• Apparel Retailer company Zumiez (NASDAQ: ZUMZ) jumped 3.4%. Is now the time to buy Zumiez? Access our full analysis report here, it’s free for active Edge members.
• Home Furniture Retailer company Williams-Sonoma (NYSE: WSM) jumped 4.2%. Is now the time to buy Williams-Sonoma? Access our full analysis report here, it’s free for active Edge members.
• Sports & Outdoor Equipment Retailer company Academy Sports (NASDAQ: ASO) jumped 5.6%. Is now the time to buy Academy Sports? Access our full analysis report here, it’s free for active Edge members.

Zooming In On Academy Sports (ASO)

Academy Sports’s shares are very volatile and have had 20 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 14 days ago when the stock dropped 3.7% on the news that the athletic retail sector felt pressure as industry bellwether Nike reported disappointing results. 

The negative sentiment followed an 11% plunge in Nike's stock a few days prior, on December 19, after its earnings report revealed significant challenges. Nike's gross margins shrank, which the company linked to rising tariff costs, and its revenue in Greater China fell for the sixth straight quarter. When a major brand like Nike struggles, it often creates concern for the stores that sell its products. The news created downward pressure on retailers like Dick's Sporting Goods, which depend on strong brands to attract customers. This ripple effect likely worried investors that Academy Sports could also face weaker sales or need to increase promotions.

Academy Sports is up 5.5% since the beginning of the year, and at $55.01 per share, it is trading close to its 52-week high of $58.86 from January 2025. Investors who bought $1,000 worth of Academy Sports’s shares 5 years ago would now be looking at an investment worth $2,662.

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