Skip to main content
hello world

Paid Post: Content produced by Motley Fool. The Globe and Mail was not involved, and material was not reviewed prior to publication.

Why Wayfair Stock Lost 9% Today

Motley Fool - Mon Oct 21, 4:46PM CDT

Shares of Wayfair (NYSE: W) were taking a dive, even though there was no company-specific news out on the online home furnishings retailer.

Instead, Wayfair got hit by rising Treasury yields, a sign investors think the Federal Reserve will be slower to cut interest rates than they previously did. Some economists now expect no cut at the next meeting in two weeks.

As a result, Wayfair finished the day down 9.3%.

A living room set with a green sofa.

Image source: Getty Images.

Wayfair could use some help

Spending on home improvement is closely tied to mortgage rates, as homebuying tends to spur spending on home furnishings, as do renovation projects. High rates have cooled off Wayfair's business, and investors have been counting on rate cuts to drive a recovery in the housing market, as existing home sales have been hovering near a 30-year low.

The benchmark 10-year Treasury yield today jumped 2.7% to 4.18%, its highest level since July, and mortgage rates reached a two-month high.

Those trends are clear headwinds for investors and contrary to what they had hoped, with the Fed having begun a new rate-cut cycle.

Can Wayfair bounce back?

Wayfair was flying high during the pandemic, but the company has struggled since then, as both revenue growth and generally accepted accounting principles (GAAP) profits have been elusive.

The good news is interest rate cuts from the Fed should eventually come, though the timing is still uncertain, and both presidential candidates have promised various programs to mitigate the national housing shortage.

The housing market will eventually bounce back, and when it does, Wayfair should be ready to capitalize on it.

Don’t miss this second chance at a potentially lucrative opportunity

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

  • Amazon: if you invested $1,000 when we doubled down in 2010, you’d have $21,285!*
  • Apple: if you invested $1,000 when we doubled down in 2008, you’d have $44,456!*
  • Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $411,959!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

See 3 “Double Down” stocks »

*Stock Advisor returns as of October 21, 2024

Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool recommends Wayfair. The Motley Fool has a disclosure policy.