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A number of stocks fell in the afternoon session after a report revealed that U.S. consumer confidence dropped for a second consecutive month, hitting a five-month low amid worries over inflation and the job market.
Market volatility increased as a partisan standoff pushed the federal government closer to a shutdown. If lawmakers fail to reach a spending agreement, a shutdown would begin, furloughing thousands of federal workers. This prospect has weighed on investor sentiment, creating a 'risk-off' mood in the markets as traders brace for potential economic disruption. The political uncertainty adds a layer of caution for investors heading into the final day of the month.
Adding to the weakness, a key report showed U.S. consumer confidence unexpectedly fell to a five-month low in September. The Conference Board's consumer confidence index slid to 94.2, a steeper drop than analysts had anticipated and its lowest reading since April. 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 or shopping for non-essential goods, which could negatively impact the future revenues and profits of companies in these 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:
Dave & Buster’s shares are extremely volatile and have had 49 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 14 days ago when the stock dropped 17.1% on the news that the company reported weaker-than-expected second-quarter financial results.
The arcade and restaurant chain posted adjusted earnings of 40 cents per share, falling significantly short of analyst estimates of 92 cents per share. This also marked a substantial decline from the 99 cents per share reported in the same quarter last year. Revenue for the period was $557.4 million, also missing Wall Street's forecast of approximately $562.7 million. Adding to investor concerns, same-store sales declined by 3%, indicating sluggish performance.
Dave & Buster's is down 40.4% since the beginning of the year, and at $18.05 per share, it is trading 57.1% below its 52-week high of $42.02 from November 2024. Investors who bought $1,000 worth of Dave & Buster’s shares 5 years ago would now be looking at an investment worth $1,190.
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