What Happened?
A number of stocks fell in the afternoon session after Walmart’s results reinforced worries about a stretched U.S. consumer. According to CNBC, Walmart (NYSE: WMT) shares fell nearly 10% even after a revenue beat and a full-year outlook raise, as U.S. comparable sales grew only 2.6% — short of Wall Street’s roughly 3.5% expectation — and third-quarter sales guidance of 3% to 3.75% looked light. CFO John David Rainey told CNBC the company was eligible for about $2.9 billion in tariff refunds, with just under $100 million still outstanding, and plans to use those funds to lower prices in the third quarter; he also flagged more than $2 billion in incremental fuel-related cost headwinds this year.
That combination — softer comps, cautious near-term guidance, and explicit price and fuel pressure — spilled into discretionary and value retailers that investors treat as consumer proxies.
The selloff landed on top of already soft macro reads: July retail sales fell 0.6%, the first decline in nine months, and the University of Michigan’s latest consumer survey showed renewed pessimism as households absorb higher costs for gas and groceries. When the largest U.S. retailer signals customers are still spending but feeling the pinch, the tape often reprices the broader retail complex lower with it.
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:
- Electronics & Gaming Retailer company Best Buy (NYSE: BBY) fell 4.4%. Is now the time to buy Best Buy? Access our full analysis report here, it’s free.
- Sports & Outdoor Equipment Retailer company Dick's (NYSE: DKS) fell 6.3%. Is now the time to buy Dick's? Access our full analysis report here, it’s free.
- Home Improvement Retailer company Floor And Decor (NYSE: FND) fell 4.2%. Is now the time to buy Floor And Decor? Access our full analysis report here, it’s free.
- Home Furniture Retailer company RH (NYSE: RH) fell 7.8%. Is now the time to buy RH? Access our full analysis report here, it’s free.
- Apparel Retailer company Zumiez (NASDAQ: ZUMZ) fell 4.8%. Is now the time to buy Zumiez? Access our full analysis report here, it’s free.
Zooming In On RH (RH)
RH’s shares are extremely volatile and have had 37 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 9 months ago when the stock gained 10.3% on the news that 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.
RH is down 18.8% since the beginning of the year, and at $157.03 per share, it is trading 37.4% below its 52-week high of $251 from September 2025. Investors who bought $1,000 worth of RH’s shares 5 years ago would now be looking at only $227.30.
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