What Happened?
A number of stocks jumped in the afternoon session after news broke that the U.S. and Iran were discussing a 10-point proposal for a ceasefire.
This development sent West Texas Intermediate crude futures tumbling to roughly $93 a barrel, providing immediate relief to the consumer discretionary sector. The market was betting that the pause in hostilities would reverse the trend of skyrocketing energy costs projected to eat into household budgets. For discretionary companies, lower gasoline prices act as a de facto tax cut for consumers, increasing disposable income for non-essential purchases.
As the threat of a prolonged energy crisis in the Middle East fades, consumer sentiment is expected to rebound sharply.
Adding to the optimism, Delta's record quarterly sales suggest that discretionary spending power remains intact despite recent geopolitical headwinds.
When coupled with the 17% plunge in oil prices, this trend signals a turning point for consumer confidence and a cooling of the inflationary pressures that have recently weighed on the retail sector.
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 Under Armour (NYSE: UAA) jumped 3.4%. Is now the time to buy Under Armour? Access our full analysis report here, it’s free.
- Consumer Discretionary - Casino Operator company Boyd Gaming (NYSE: BYD) jumped 3.4%. Is now the time to buy Boyd Gaming? Access our full analysis report here, it’s free.
- Consumer Discretionary - Home Furnishings company La-Z-Boy (NYSE: LZB) jumped 4%. Is now the time to buy La-Z-Boy? Access our full analysis report here, it’s free.
- Consumer Discretionary - Distributors company US Foods (NYSE: USFD) jumped 3.3%. Is now the time to buy US Foods? Access our full analysis report here, it’s free.
- Consumer Discretionary - Broadcasting company iHeartMedia (NASDAQ: IHRT) jumped 3.8%. Is now the time to buy iHeartMedia? Access our full analysis report here, it’s free.
Zooming In On La-Z-Boy (LZB)
La-Z-Boy’s shares are not very volatile and have only had 6 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 5 months ago when the stock gained 18.9% on the news that the company reported third-quarter results that surpassed analyst expectations and provided a strong forecast for the upcoming quarter.
The company posted adjusted earnings of $0.71 per share, significantly higher than the consensus estimate of $0.54. Revenue for the quarter landed at $522.5 million. While this was flat year-over-year, it still beat expectations.
Further boosting investor confidence, La-Z-Boy provided an optimistic outlook, guiding for fourth-quarter revenue of around $535 million, which was also above the consensus estimate.
The strong earnings beat and positive guidance signaled to investors that the company is navigating the current economic environment effectively.
La-Z-Boy is down 12.3% since the beginning of the year, and at $32.72 per share, it is trading 26.1% below its 52-week high of $44.28 from May 2025. Investors who bought $1,000 worth of La-Z-Boy’s shares 5 years ago would now be looking at only $764.82.
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