What Happened?
A number of stocks fell in the afternoon session after President Donald Trump threatened to impose "massive" tariffs on Chinese products, reigniting trade war fears.
The unexpected social media post was a stated countermeasure to Beijing's recent announcement of new export controls on rare-earth minerals. These minerals are critical components for manufacturing everything from consumer electronics to jet engines, and the news jolted a previously calm Wall Street. The renewed fears of a trade war sent all major indices into negative territory. The tech-heavy Nasdaq Composite saw the steepest decline, falling 1.7%, as investors weighed the potential impact of supply chain disruptions for key manufacturing components.
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:
- Modern Fast Food company Shake Shack (NYSE: SHAK) fell 4.3%. Is now the time to buy Shake Shack? Access our full analysis report here, it’s free for active Edge members.
- Sit-Down Dining company Bloomin' Brands (NASDAQ: BLMN) fell 7%. Is now the time to buy Bloomin' Brands? Access our full analysis report here, it’s free for active Edge members.
- Traditional Fast Food company Jack in the Box (NASDAQ: JACK) fell 4.7%. Is now the time to buy Jack in the Box? Access our full analysis report here, it’s free for active Edge members.
- Sit-Down Dining company Kura Sushi (NASDAQ: KRUS) fell 4.3%. Is now the time to buy Kura Sushi? Access our full analysis report here, it’s free for active Edge members.
- Sit-Down Dining company Dine Brands (NYSE: DIN) fell 5%. Is now the time to buy Dine Brands? Access our full analysis report here, it’s free for active Edge members.
Zooming In On Bloomin' Brands (BLMN)
Bloomin' Brands’s shares are extremely volatile and have had 45 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 10 days ago when the stock dropped 3.3% on the news that a report showed U.S. consumer confidence unexpectedly fell for a second straight month to a five-month low. This downturn reflects growing pessimism among Americans about inflation and a weakening job market. Consumer confidence is a closely watched economic indicator as it gauges households' willingness to spend.
A decline suggests that consumers may pull back on discretionary purchases, such as dining out, which could negatively impact the future revenues and profits of companies in the sector. Compounding the issue, market volatility has increased as a partisan standoff pushes the federal government closer to a shutdown. This prospect has weighed on investor sentiment, creating a 'risk-off' mood in the markets as traders brace for potential economic disruption.
Bloomin' Brands is down 41.3% since the beginning of the year, and at $7.03 per share, it is trading 58.8% below its 52-week high of $17.04 from October 2024. Investors who bought $1,000 worth of Bloomin' Brands’s shares 5 years ago would now be looking at an investment worth $405.37.
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