Robust consumer behavior drives stock markets to new heights

The stock markets recorded a significant rise in the afternoon after stronger-than-expected consumer behavior data for August was released, indicating a resilient economy. According to the Bureau of Economic Analysis, personal expenditures rose by 0.6% last month, surpassing estimates and marking the third consecutive month of solid gains. Inflation-adjusted real expenditures also increased by a healthy 0.4%. This robust consumer activity was accompanied by a clear inflation report. The core personal consumption expenditures (PCE) index, the Federal Reserve's preferred inflation measure, met expectations with a monthly increase of 0.2%. Investors interpreted the news as a positive signal that the Federal Reserve can support the economy without risking excessively high inflation. The positive sentiment helped major indices recover some of the losses from a recent three-day decline and lifted stocks across various sectors. Stock markets tend to overreact to news, and large price declines can provide a good opportunity to acquire high-quality stocks. Among the companies whose stocks moved is Harley-Davidson. The company's shares are somewhat volatile and have recorded 14 movements of more than 5% over the past year. In this context, today's movement suggests that the market views this news as significant but not fundamental to the business assessment. A few days ago, we reported on the last major rise when the stock gained 2.1% after the company confirmed it would not increase the price of its X440 motorcycle in India despite a new tax. Harley-Davidson decided to absorb the costs from the revised GST framework, which classified motorcycles with engines over 350 cc into a higher tax category. This decision strengthened the competitiveness of the X440, especially after the withdrawal of a competing model from the market, and underscored the company's focus on the key market of India, where the X440 enjoyed strong sales. In addition to this positive news, there were reports of the company's plans to introduce more entry-level models in other emerging markets like the Philippines, pointing to a broader growth strategy. The company also introduced its new 2025 Cruiser line and a new 2026 Night Rod model, showing that it is also refreshing its classic offerings. Harley-Davidson has lost 1.5% since the beginning of the year and is trading at $29 per share, which is 26.3% below its 52-week high of $39.37 from September 2024. Investors who invested $1,000 in Harley-Davidson shares five years ago would now see a value of $1,213.