What Happened?

A number of stocks fell in the afternoon session after the major indices fell further in the afternoon (Nasdaq -1.3%, S&P 500 - 1.4%) as Treasury yields rose, reflecting market anxiety over a draft federal budget that could worsen the already wide US fiscal deficit. 

A poor auction for 20-year U.S. Treasury bonds further raised concerns, as weak demand implies investors are becoming more cautious about holding long-dated U.S. debt. 

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 (yields), investors can apply higher valuations to their stocks; when yields rise, that math works in reverse. 

Adding to the cautious mood were earnings results from retail giants Target and Lowe's, both of which reported weak earnings that missed expectations, pointing to a potential slowdown in consumer spending and further weighing on sentiment. 

Lastly, some influential voices such as Jamie Dimon (JPMorgan) and Steve Cohen (Point72) made cautious comments about the market, which can sometimes become self-fulfilling prophecies as investors increase their cautiousness and skittishness.

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:

• Sports & Outdoor Equipment Retailer company Academy Sports (NASDAQ: ASO) fell 5.2%. Is now the time to buy Academy Sports? Access our full analysis report here, it’s free.
• Traditional Fast Food company Krispy Kreme (NASDAQ: DNUT) fell 5.1%. Is now the time to buy Krispy Kreme? Access our full analysis report here, it’s free.
• Household Products company Spectrum Brands (NYSE: SPB) fell 5.4%. Is now the time to buy Spectrum Brands? Access our full analysis report here, it’s free.
• Broadcasting company Gray Television (NYSE: GTN) fell 5.5%. Is now the time to buy Gray Television? Access our full analysis report here, it’s free.
• Casino Operator company PENN Entertainment (NASDAQ: PENN) fell 5.5%. Is now the time to buy PENN Entertainment? Access our full analysis report here, it’s free.

Zooming In On PENN Entertainment (PENN)

PENN Entertainment’s shares are extremely volatile and have had 31 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 29 days ago when the stock gained 8.2% on the news that investor sentiment improved on renewed optimism that the US-China trade conflict might be nearing a resolution. 

According to reports, Treasury Secretary Scott Bessent reinforced this positive outlook by describing the trade war as "unsustainable," and emphasized that a potential agreement between the two economic powers "was possible." His comments signaled to markets that both sides might be motivated to seek common ground, raising expectations for reduced tariffs and more stability across markets.

PENN Entertainment is down 26.2% since the beginning of the year, and at $14.20 per share, it is trading 37.5% below its 52-week high of $22.73 from February 2025. Investors who bought $1,000 worth of PENN Entertainment’s shares 5 years ago would now be looking at an investment worth $478.92.

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