What Happened?
A number of stocks jumped in the morning session after the major indices rebounded (Nasdaq +2.0%, S&P 500 +1.5%) as President Trump postponed the planned 50% tariff on European Union imports, shifting the start date to July 9, 2025.
Companies with substantial business ties to Europe likely had some relief as the delay reduced near-term cost pressures and preserved cross-border demand.
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:
- Home Furniture Retailer company Sleep Number (NASDAQ: SNBR) jumped 7.8%. Is now the time to buy Sleep Number? Access our full analysis report here, it’s free.
- Shelf-Stable Food company SunOpta (NASDAQ: STKL) jumped 5%. Is now the time to buy SunOpta? Access our full analysis report here, it’s free.
- Personal Care company BeautyHealth (NASDAQ: SKIN) jumped 5.6%. Is now the time to buy BeautyHealth? Access our full analysis report here, it’s free.
- Gaming Solutions company Inspired (NASDAQ: INSE) jumped 5.1%. Is now the time to buy Inspired? Access our full analysis report here, it’s free.
- Leisure Facilities company European Wax Center (NASDAQ: EWCZ) jumped 6.5%. Is now the time to buy European Wax Center? Access our full analysis report here, it’s free.
Zooming In On Sleep Number (SNBR)
Sleep Number’s shares are extremely volatile and have had 84 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 about 1 month ago when the stock dropped 5.9% as Federal Reserve Chair Jerome Powell signaled a cautious stance on future monetary policy decisions during a speech in Chicago, emphasizing that trade tariffs could add upward pressure to inflation in the short term and complicate the Fed's efforts to stabilize the economy. He warned that such trade measures are "likely to move us further away from our goals," referring to the Fed's dual mandate of price stability and maximum employment.
The comments did little to improve sentiment, as major indices were already in the negative territory in the morning session after Nvidia announced it might be unable to sell some high-end chips (including the H20 chips) to China due to export controls and requirements from the Trump administration. As a result, the company planned to take a $5.5 billion charge due to inventory writedowns and canceled sales.
Adding to the sector's pressure, chip tool maker ASML posted weak bookings (a key demand indicator) which fell below Wall Street's expectations, noting that tariffs had made the industry's outlook more uncertain. Taken together, these updates likely fueled investor anxiety, amplifying concerns about global trade tensions, tech sector vulnerability, and the Fed's limited room to maneuver in an increasingly uncertain macro environment.
Sleep Number is down 33.8% since the beginning of the year, and at $9.89 per share, it is trading 51.5% below its 52-week high of $20.41 from December 2024. Investors who bought $1,000 worth of Sleep Number’s shares 5 years ago would now be looking at an investment worth $296.64.
Today’s young investors won’t have read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next.
