What Happened?
A number of stocks fell in the afternoon session after reports showed that wholesale inflation accelerated more sharply than anticipated in April.
The Producer Price Index (PPI), which measures inflation at the wholesale level, jumped a seasonally adjusted 1.4% for the month, significantly higher than the 0.5% economists had expected. This data follows a recent Consumer Price Index (CPI) report showing consumer inflation rising at its fastest pace in over three years. These rising prices, particularly for energy, weighed on household budgets, eroding purchasing power.
Compounding the issue, real wages, which account for inflation, declined for the first time in three years. This combination of higher costs and reduced disposable income dampened consumer confidence and raised concerns about future spending on non-essential goods and services.
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:
- Consumer Discretionary - Leisure Facilities company Lucky Strike (NYSE: LUCK) fell 3.6%. Is now the time to buy Lucky Strike? Access our full analysis report here, it’s free.
- Consumer Discretionary - Toys and Electronics company Funko (NASDAQ: FNKO) fell 6.6%. Is now the time to buy Funko? Access our full analysis report here, it’s free.
- Consumer Discretionary - Real Estate Services company The Real Brokerage (NASDAQ: REAX) fell 2.7%. Is now the time to buy The Real Brokerage? Access our full analysis report here, it’s free.
- Consumer Discretionary - Apparel and Accessories company Stitch Fix (NASDAQ: SFIX) fell 2.8%. Is now the time to buy Stitch Fix? Access our full analysis report here, it’s free.
- Consumer Discretionary - Real Estate Services company Opendoor (NASDAQ: OPEN) fell 2.5%. Is now the time to buy Opendoor? Access our full analysis report here, it’s free.
Zooming In On Funko (FNKO)
Funko’s shares are extremely volatile and have had 56 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 2 days ago when the stock dropped 3.3% on the news that Brent crude surged, erasing the brief oil relief from the previous week as consumer sentiment hit a record low, sparking concerns that shoppers will cut back on non-essential spending.
The University of Michigan's key sentiment index dropped to 48.2 in early May, as consumers feel "buffeted by cost pressures." The survey revealed that about one-third of consumers were worried about high gasoline prices, while another 30% cited tariffs. This erosion of confidence is a worrying sign for the consumer discretionary sector, which includes everything from apparel to travel. When households feel financially strained, they typically reduce spending on non-essential items first.
Goldman Sachs cut its 2026 discretionary cash flow growth forecast from 5.1% to 3.7% as energy spending crowded out consumer budgets. Consumer discretionary companies sell what people buy after necessities, restaurants, clothing, cars, and entertainment. Gas is the most direct variable: when filling the tank costs more, households have less left for everything else.
Funko is up 53.7% since the beginning of the year, and at $5.17 per share, it is trading close to its 52-week high of $5.54 from May 2026. Despite the year-to-date gain, investors who bought $1,000 worth of Funko’s shares 5 years ago would now be looking at only $222.25.
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