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 Kontoor Brands (NYSE: KTB) fell 6.1%. Is now the time to buy Kontoor Brands? Access our full analysis report here, it’s free.
• Consumer Discretionary - Real Estate Services company RE/MAX (NYSE: RMAX) fell 3.8%. Is now the time to buy RE/MAX? Access our full analysis report here, it’s free.

Zooming In On Kontoor Brands (KTB)

Kontoor Brands’s shares are quite volatile and have had 17 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 4 days ago when the stock gained 8% on the news that the company reported better-than-expected first-quarter 2026 revenue and raised its full-year guidance. 

The owner of the Wrangler and Lee brands posted revenue of $808 million, a 29.7% increase from the prior year, surpassing Wall Street's expectations. This strong top-line growth was a key highlight for the quarter. However, the results were mixed, as adjusted earnings per share of $1.06 fell short of analysts' consensus estimates. 

Despite the earnings miss, management signaled confidence in the business by increasing its full-year forecast for both revenue and adjusted earnings per share. The positive outlook and strong sales performance appeared to resonate with investors, driving the stock higher.

Kontoor Brands is up 12.8% since the beginning of the year, but at $69.35 per share, it is still trading 19.6% below its 52-week high of $86.27 from October 2025. Investors who bought $1,000 worth of Kontoor Brands’s shares 5 years ago would now be looking at an investment worth $1,092.

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