What Happened?
A number of stocks jumped in the afternoon session after President Trump reversed course on a military escalation against Iran that wiped $1.2 trillion from the market earlier in the day.
The session opened under heavy pressure after Trump posted on Truth Social that the U.S. would attack Iran "VERY HARD TONIGHT" and threatened to seize the country's oil assets. Then, around midday, he posted again cancelling the planned strikes. His statement said discussions had been brought to "the highest level of Iranian leadership" and that final points of a peace deal had been "approved by all parties involved," citing thirteen countries including the U.S., Israel, Saudi Arabia, UAE, and Qatar. A signing date would be "announced shortly."
The market moved the moment the post landed. The S&P 500 jumped 1.4%, the Dow surged, and the Nasdaq gained 1.8%. Oil fell more than 3%. The 10-year Treasury yield eased from 4.55% to 4.47%. The read-through is simple: lower oil means lower inflation means less pressure on the Fed to hike. Iran's disruption of the Strait of Hormuz was the single largest driver of the 4.2% annual inflation print reported earlier in the week as energy alone accounted for more than 60% of May's monthly CPI increase. A ceasefire that reopens the Strait unwinds that pressure immediately, potentially taking the December rate hike that markets were fully pricing in off the table.
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:
- Discount Retailer company Burlington (NYSE: BURL) jumped 3.9%. Is now the time to buy Burlington? Access our full analysis report here, it’s free.
- Apparel Retailer company Victoria's Secret (NYSE: VSXY) jumped 4.4%. Is now the time to buy Victoria's Secret? Access our full analysis report here, it’s free.
- Auto Parts Retailer company Genuine Parts (NYSE: GPC) jumped 3.7%. Is now the time to buy Genuine Parts? Access our full analysis report here, it’s free.
Zooming In On Victoria's Secret (VSXY)
Victoria's Secret’s shares are extremely volatile and have had 38 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 gained 5.2% on the news that the major indices surged as consumer-wallet relief from falling oil prices restored confidence in discretionary spending.
Apparel is arguably the most discretionary category in retail. When consumers feel pinched, they skip the new outfit. When they feel flush, they refresh the wardrobe. Apparel retailers carry seasonal inventory that has to clear at full price or it gets marked down 30-50%.
When consumer confidence improves, full-price sell-through rises and the gross margin difference is enormous. Lower freight costs from cheaper oil also help, since apparel travels long supply chains from Asia. Ralph Lauren's 10% jump the previous week (on the Q1 beat) showed how quickly the apparel group can move when sentiment shifts.
Victoria's Secret is up 46.4% since the beginning of the year, and at $78.10 per share, it is trading close to its 52-week high of $80.06 from June 2026. Investors who bought $1,000 worth of Victoria's Secret’s shares at the IPO in July 2021 would now be looking at an investment worth $1,838.
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