What Happened?

A number of stocks jumped in the afternoon session after a softer-than-expected inflation report fueled hopes for interest rate cuts by the Federal Reserve. The January Consumer Price Index (CPI), a key measure of inflation, rose by 0.2%, which was less than economists had forecast, with the annual rate cooling to 2.4%. This encouraging data increased market expectations for the Fed to begin cutting interest rates as early as June. The news prompted a rally in Treasuries as their yields fell. While the market's reaction was initially described as a "bumpy ride" due to concerns in other sectors, the favorable inflation data ultimately helped calm Wall Street. Lower inflation is a key prerequisite for the central bank to ease its monetary policy, which is generally supportive of stock valuations.

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:

• Beauty and Cosmetics Retailer company Warby Parker (NYSE: WRBY) jumped 5.1%. Is now the time to buy Warby Parker? Access our full analysis report here, it’s free.
• Beauty and Cosmetics Retailer company Bath and Body Works (NYSE: BBWI) jumped 4.8%. Is now the time to buy Bath and Body Works? Access our full analysis report here, it’s free.

Zooming In On Warby Parker (WRBY)

Warby Parker’s shares are extremely volatile and have had 37 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 16 days ago when the stock dropped 7.5% on the news that an analyst expressed a cautious view on the company's partnership with Google for AI-enabled glasses. The firm William Blair took a "sober look" at the collaboration, noting it had heard of "some relatively aggressive assumptions" regarding the potential revenue and profit from the venture. The analyst told investors that the AI glasses partnership was unlikely to contribute significant sales in 2026. This assessment appeared to lower investor expectations about the immediate financial benefits of the high-profile partnership, leading to a drop in the share price.

Warby Parker is down 1.1% since the beginning of the year, and at $22.36 per share, it is trading 26% below its 52-week high of $30.23 from December 2025. Investors who bought $1,000 worth of Warby Parker’s shares at the IPO in September 2021 would now be looking at an investment worth $410.35.

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