What Happened?
A number of stocks jumped in the afternoon session after a softer-than-expected inflation report fueled hopes for interest rate cuts by the Federal Reserve. The January Consumer Price Index (CPI), a key measure of inflation, rose by 0.2%, which was less than economists had forecast, with the annual rate cooling to 2.4%. This encouraging data increased market expectations for the Fed to begin cutting interest rates as early as June. The news prompted a rally in Treasuries as their yields fell. While the market's reaction was initially described as a "bumpy ride" due to concerns in other sectors, the favorable inflation data ultimately helped calm Wall Street. Lower inflation is a key prerequisite for the central bank to ease its monetary policy, which is generally supportive of stock valuations.
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:
- Grocery Store company Albertsons (NYSE:ACI) jumped 3.5%. Is now the time to buy Albertsons? Access our full analysis report here, it’s free.
- Discount Retailer company Burlington (NYSE:BURL) jumped 3.5%. Is now the time to buy Burlington? Access our full analysis report here, it’s free.
- Large-format Grocery & General Merchandise Retailer company Target (NYSE:TGT) jumped 2.6%. Is now the time to buy Target? Access our full analysis report here, it’s free.
- Home Furniture Retailer company Williams-Sonoma (NYSE:WSM) jumped 2.6%. Is now the time to buy Williams-Sonoma? Access our full analysis report here, it’s free.
Zooming In On Burlington (BURL)
Burlington’s shares are quite volatile and have had 16 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 biggest move we wrote about over the last year was 11 months ago when the stock gained 13.7% on the news that the company reported impressive fourth quarter 2024 results which beat analysts' profit and EPS expectations. The key highlight for the quarter was the strong 6% growth in comparable store sales, significantly exceeding the company's guidance of 0% to 2%. Looking ahead to fiscal 2025, Burlington anticipates overall sales growth of 6% to 8%, with comparable sales expected to increase by up to 2%. Despite this optimistic outlook, management remains cautious due to ongoing economic uncertainty. Overall, this was a decent quarter, but expectations were likely low given concerns about overall consumer health and very uneven quarterly results from retail peers.
Burlington is up 1.6% since the beginning of the year, and at $303.05 per share, it is trading close to its 52-week high of $318.49 from February 2026. Investors who bought $1,000 worth of Burlington’s shares 5 years ago would now be looking at an investment worth $1,151.
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