What Happened?
A number of stocks fell in the afternoon session after Brent crude surged, erasing the brief oil relief from the previous week as consumer sentiment hit a record low, sparking concerns that shoppers will cut back on non-essential spending.
The University of Michigan's key sentiment index dropped to 48.2 in early May, as consumers feel "buffeted by cost pressures." The survey revealed that about one-third of consumers were worried about high gasoline prices, while another 30% cited tariffs. This erosion of confidence is a worrying sign for the consumer discretionary sector, which includes everything from apparel to travel.
When households feel financially strained, they typically reduce spending on non-essential items first. Goldman Sachs cut its 2026 discretionary cash flow growth forecast from 5.1% to 3.7% as energy spending crowded out consumer budgets.
Consumer discretionary companies sell what people buy after necessities, restaurants, clothing, cars, and entertainment. Gas is the most direct variable: when filling the tank costs more, households have less left for everything else.
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 Stitch Fix (NASDAQ: SFIX) fell 7%. Is now the time to buy Stitch Fix? Access our full analysis report here, it’s free.
- Consumer Discretionary - Apparel and Accessories company Oxford Industries (NYSE: OXM) fell 5.8%. Is now the time to buy Oxford Industries? Access our full analysis report here, it’s free.
- Consumer Discretionary - Wireless, Cable and Satellite company Cable One (NYSE: CABO) fell 7.4%. Is now the time to buy Cable One? Access our full analysis report here, it’s free.
Zooming In On Cable One (CABO)
Cable One’s shares are extremely volatile and have had 60 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 10 days ago when the stock dropped 19.5% on the news that the company reported mixed first-quarter 2026 results that missed revenue expectations.
The company's revenue fell 7.3% year over year to $353 million, falling short of Wall Street's estimate of $359.4 million. In contrast, its GAAP profit of $6.12 per share was 0.6% above analysts’ consensus estimates.
A key point of concern for investors was the decline in customers, as residential data subscribers fell by 57,900 year on year. The company also missed on adjusted EBITDA, which came in at $183.3 million versus estimates of $186.3 million. The revenue miss and significant subscriber losses likely overshadowed the narrow earnings beat, driving the negative investor sentiment.
Cable One is down 44.8% since the beginning of the year, and at $57.49 per share, it is trading 67.8% below its 52-week high of $178.48 from October 2025. Investors who bought $1,000 worth of Cable One’s shares 5 years ago would now be looking at only $33.05.
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