Macy's and National Vision Shares Skyrocket, What You Need To Know

What Happened?

A number of stocks jumped in the afternoon session after a key inflation data aligned with forecasts, bolstering hopes for continued interest rate cuts from the Federal Reserve. 

The Personal Consumption Expenditures (PCE) price index, the central bank's preferred gauge of inflation, showed a slight year-over-year increase in August but did not surprise economists. This report was met with relief on Wall Street, as it suggests inflationary pressures remain contained, giving the Federal Reserve more leeway to continue its monetary easing policy. Investors interpreted the news as a positive sign that the Fed can support the economy without risking runaway inflation. The positive sentiment helped the major indices claw back some of the losses from a recent three-day slide, with stocks rising across various sectors.

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:

• Department Store company Macy's (NYSE:M) jumped 5.4%. Is now the time to buy Macy's? Access our full analysis report here, it’s free.
• Specialty Retail company National Vision (NASDAQ:EYE) jumped 4%. Is now the time to buy National Vision? Access our full analysis report here, it’s free.

Zooming In On Macy's (M)

Macy’s shares are very volatile and have had 20 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 23 days ago when the stock gained 19.6% on the news that the company reported second-quarter results that beat Wall Street's expectations, raised its full-year forecast, and posted a welcome return to same-store sales growth. 

The department store chain's same-store sales, which track sales online and at stores open for at least a year, rose 1.9% year-over-year. This marked a significant turnaround from recent declines, including a 4% drop in the same quarter last year. While total revenue fell 1.9% to $5.00 billion, it still surpassed analysts' estimates. 

Similarly, adjusted earnings of $0.41 per share were down from the prior year but more than doubled the consensus forecast of $0.19. Investors responded positively to signs that the company's strategy of closing underperforming stores is yielding results. Buoyed by the performance, Macy's lifted its full-year guidance for both revenue and adjusted earnings.

Macy's is up 8.4% since the beginning of the year, and at $17.95 per share, it is trading close to its 52-week high of $18.10 from December 2024. Investors who bought $1,000 worth of Macy’s shares 5 years ago would now be looking at an investment worth $3,011.

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