What Happened?
A number of stocks jumped in the morning session after oil fell more than 5%, as the Trump administration announced a new peace deal that would lead to the reopening of the Strait of Hormuz.
Most clothing sold in the United States is manufactured in Asia from petroleum-derived synthetic fabrics (polyester, nylon, and elastane) and transported by container ships that burn bunker fuel. When oil spiked after the Hormuz blockade began, both input costs and ocean freight rates rose, compressing margins at almost every step.
With Brent crude falling toward $83 from a May peak above $126, those pressures reverse. Retailers sourcing autumn and winter inventory are in the middle of purchasing commitments right now, so lower logistics and raw material costs at this point in the procurement cycle have direct implications for the margins they will report in the second half of the year.
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:
- Consumer Discretionary - Apparel and Accessories company ThredUp (NASDAQ: TDUP) jumped 5.9%. Is now the time to buy ThredUp? Access our full analysis report here, it’s free.
- Consumer Discretionary - Apparel and Accessories company Stitch Fix (NASDAQ: SFIX) jumped 7.9%. Is now the time to buy Stitch Fix? Access our full analysis report here, it’s free.
Zooming In On Stitch Fix (SFIX)
Stitch Fix’s shares are extremely volatile and have had 43 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 4 days ago when the stock gained 13.9% on the news that the company reported strong first-quarter financial results that surpassed analyst expectations.
The rally extended a 9.2% gain from the previous session, which followed the earnings release. Stitch Fix posted revenue of $340.3 million, up 4.7% year-on-year and beating forecasts. The company's loss per share of $0.01 was a significant improvement over the $0.06 loss analysts had anticipated. Investors were also encouraged by the company's optimistic guidance; its forecast for full-year adjusted EBITDA of $50.5 million at the midpoint was notably above Wall Street estimates.
While active clients declined year-over-year, the strong top-and-bottom-line beats and positive outlook drove investor optimism.
Stitch Fix is down 19.2% since the beginning of the year, and at $4.14 per share, it is trading 29.1% below its 52-week high of $5.83 from September 2025. Investors who bought $1,000 worth of Stitch Fix’s shares 5 years ago would now be looking at only $67.64.
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