What Happened?

A number of stocks fell in the pre-market session after President Trump announced "reciprocal tariffs" on all US imports, set at a minimum rate of 10%. Markets reacted negatively to the announcement, reflecting deep concerns among investors about the broader economic implications. The tariffs were likely seen as a significant threat to global trade flows, with the potential to slow economic growth, drive up consumer prices, and spark retaliatory measures.

Wedbush analyst Dan Ives captured the prevailing market anxiety, stating, "We would characterize this slate of tariffs as 'worse than the worst case scenario' the Street was fearing." His comment highlighted how the scope and severity of the tariffs far exceeded Wall Street's expectations, adding a new layer of uncertainty for businesses and investors.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.

Among others, following stocks were impacted:

Zooming In On Sportsman's Warehouse (SPWH)

Sportsman's Warehouse’s shares are extremely volatile and have had 71 moves greater than 5% over the last year. But moves this big are rare even for Sportsman's Warehouse and indicate this news significantly impacted the market’s perception of the business.

The previous big move we wrote about was a day ago when the stock gained 109% on the news that the company reported impressive fourth quarter 2024 results, which blew past analysts' revenue, EPS, and EBITDA expectations. The key highlight was the turnaround in same-store sales, which were essentially flat, a sharp recovery from the nearly 13% drop in the same quarter last year. The financial outlook was also encouraging as its full-year EBITDA guidance outperformed Wall Street's estimates. The broader retail environment remained challenging, but the company's focus on local and seasonal demand and a leaner inventory should provide a cushion. Zooming out, we think this quarter featured some important positives.