What Happened?
A number of stocks jumped in the afternoon session after April retail sales data showed consumer spending remained solid despite rising gas prices and inflation.
While the headline retail sales figure rose by 0.5%, a slowdown from the prior month, underlying details were stronger than anticipated.
A key metric known as the 'control group,' which excludes volatile categories like gas and autos and is used to calculate GDP, surpassed expectations with a 0.5% increase. This suggests that shoppers are still spending on goods, particularly online, where sales jumped 1.1%. The report eased investor concerns that higher costs would significantly curb economic activity, indicating that the U.S. consumer remains resilient for now.
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 4.9%. Is now the time to buy Victoria's Secret? Access our full analysis report here, it’s free.
- Apparel Retailer company Urban Outfitters (NASDAQ: URBN) jumped 3.6%. Is now the time to buy Urban Outfitters? Access our full analysis report here, it’s free.
- Vehicle Retailer company America's Car-Mart (NASDAQ: CRMT) jumped 0.6%. Is now the time to buy America's Car-Mart? Access our full analysis report here, it’s free.
- Apparel Retailer company Tilly's (NYSE: TLYS) jumped 12.9%. Is now the time to buy Tilly's? Access our full analysis report here, it’s free.
- Vehicle Retailer company CarMax (NYSE: KMX) jumped 2.6%. Is now the time to buy CarMax? Access our full analysis report here, it’s free.
Zooming In On Tilly's (TLYS)
Tilly’s shares are extremely volatile and have had 69 moves greater than 5% over the last year. But moves this big are rare even for Tilly's and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 9 months ago when the stock gained 18% on the news that markets continued to rally amid growing investor optimism for a Federal Reserve interest rate cut in September.
This optimism was spurred by a recent Consumer Price Index (CPI) report that did not show runaway inflation, increasing the perceived probability of a rate cut to over 90%. Lower interest rates are generally seen as a positive for the economy as they reduce borrowing costs for consumers, which can stimulate spending on non-essential goods. Consequently, investors bid up shares in the apparel, home furnishings, and automotive retail industries in anticipation of stronger consumer demand.
Tilly's is up 98.3% since the beginning of the year, but at $4.01 per share, it is still trading 25.7% below its 52-week high of $5.39 from April 2026. Despite the year-to-date gain, investors who bought $1,000 worth of Tilly’s shares 5 years ago would now be looking at only $326.22.
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