What Happened: Shares of luxury department store chain Nordstrom (NYSE:JWN) fell 6.7% in the afternoon session as the major indices declined (Nasdaq down -1.70%, S&P 500 down -1.1%, Dow down -0.61%), while yields soared. Geopolitical tension heightened following reports on Saturday, April 13, 2024, that Iran launched drones and missiles at Israel, driving uncertainty about possible disruption to global trade and commerce should the tension escalate. Also, the Census Bureau report revealed March 2024 retail sales rose 0.7% compared to the previous month (ahead of market expectations for a 0.3% increase), suggesting consumption is strong amidst recent inflation concerns.
Prior to these reports, market volatility had picked up after the March 2024 CPI (Consumer Price Index - a gauge of the average price consumers pay for goods and services) report revealed inflation came in slightly hotter than expected, adding to fears that the Fed could delay rate cut plans in 2024.
As a reminder, the driver of a stock's value is the sum of its future cash flows discounted back to today. With lower interest rates, investors can apply higher valuations to their stocks. No wonder so many in the investment community are optimistic about 2024. We at StockStory remain cautious, as following the crowd can lead to adverse outcomes. During times like this, it's best to own high-quality, cash-flowing companies that can weather the ups and downs of the market.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Nordstrom? Find out by reading the original article on StockStory.
What is the market telling us: Nordstrom's shares are very volatile and over the last year have had 22 moves greater than 5%. In context of that, today's move is indicating 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 27 days ago, when the company gained 13.7% after Reuters reported the company's founding family is seeking to take the business private. The report added that Nordstrom is in talks with Morgan Stanley and Centerview Partners as it weighs the interest of other potential private equity firms for a deal. According to sources, there is no certainty an agreement will be reached.
Nordstrom is down 3.1% since the beginning of the year, and at $17.73 per share it is trading 23.9% below its 52-week high of $23.30 from July 2023. Investors who bought $1,000 worth of Nordstrom's shares 5 years ago would now be looking at an investment worth $409.83.