What Happened?

A number of stocks fell in the afternoon session after the Dow Jones Industrial Average fell as much as 0.7%, reflecting lingering uncertainty, and capping off a volatile week which saw stocks enjoy some relief as President Donald Trump reduced tensions with European allies by backing off his threat of imposing new tariffs. 

Threats of tariffs initially created uncertainty for businesses, as they can lead to higher costs for multinational corporations and disrupt global supply chains. By withdrawing the threat, the administration removed a significant headwind for the market, prompting a relief rally. This development was a key factor in helping major indexes recover from earlier losses, even as some analysts noted that underlying geopolitical risks and market volatility remain concerns for investors.

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:

• Apparel Retailer company Tilly's (NYSE: TLYS) fell 2.9%. Is now the time to buy Tilly's? Access our full analysis report here, it’s free.
• Vehicle Retailer company Penske Automotive Group (NYSE: PAG) fell 2.9%. Is now the time to buy Penske Automotive Group? Access our full analysis report here, it’s free.
• Vehicle Retailer company CarMax (NYSE: KMX) fell 3.1%. Is now the time to buy CarMax? Access our full analysis report here, it’s free.
• Grocery Store company Grocery Outlet (NASDAQ: GO) fell 1.7%. Is now the time to buy Grocery Outlet? Access our full analysis report here, it’s free.

Zooming In On CarMax (KMX)

CarMax’s shares are somewhat volatile and have had 13 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 4 months ago when the stock dropped 23.4% on the news that the company reported third-quarter 2025 results that significantly missed Wall Street's expectations. 

The company posted earnings of $0.64 per share, which fell far short of the anticipated $1.03 per share and marked a 24.7% drop from the previous year. Revenue also disappointed, coming in at $6.59 billion, below the consensus estimate of $7.07 billion and representing a 6% decrease year-over-year. The poor performance was driven by weakening demand, as same-store sales fell 7.1%. Adding to concerns, profitability worsened, with the operating margin declining to 1.8% from 2.9% in the same quarter last year.

CarMax is up 18% since the beginning of the year, but at $46.35 per share, it is still trading 48% below its 52-week high of $89.19 from February 2025. Investors who bought $1,000 worth of CarMax’s shares 5 years ago would now be looking at an investment worth $383.18.

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