What Happened?
A number of stocks fell in the afternoon session after markets raised concerns that surging gas prices would squeeze household budgets, potentially leading to a pullback in discretionary spending.
With gas prices climbing to their highest levels since 2022, the day-to-day cost of living became a significant issue for many consumers, particularly lower- and middle-income families. This pressure on household finances could force a reduction in spending on non-essential items, creating a headwind for the retail sector. Also, University of Michigan consumer sentiment hit 47.6 in April, the lowest reading in the survey's 74-year history, below Great Recession and pandemic lows. Sentiment at 47.6 signals that households are already under stress.
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:
- Specialty Retail company Leslie's (NASDAQ: LESL) fell 6%. Is now the time to buy Leslie's? Access our full analysis report here, it’s free.
- Discount Retailer company Ross Stores (NASDAQ: ROST) fell 5.6%. Is now the time to buy Ross Stores? Access our full analysis report here, it’s free.
- Apparel Retailer company Zumiez (NASDAQ: ZUMZ) fell 5.7%. Is now the time to buy Zumiez? Access our full analysis report here, it’s free.
Zooming In On Leslie's (LESL)
Leslie’s shares are extremely volatile and have had 104 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 7 days ago when the stock dropped 5% on the news that the spike in oil prices threatened to siphon another round of discretionary spending away from store registers and into gas tanks.
With WTI above $105 and gasoline already at $4 per gallon, every additional dollar at the pump is a dollar not spent on apparel, electronics, or home goods a dynamic that hits discretionary retailers hardest given their already-stretched lower-income customer base. Combined with rising freight costs, tariff pressures on imported goods, and the prospect of weaker summer foot traffic if travel and tourism patterns disrupt, retailers faced a particularly difficult margin and comp-sales setup heading into back-to-school season.
Leslie's is down 13.6% since the beginning of the year, and at $1.50 per share, it is trading 91.8% below its 52-week high of $18.27 from May 2025. Investors who bought $1,000 worth of Leslie’s shares 5 years ago would now be looking at only $2.77.
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