What Happened?
Shares of casual restaurant chain Portillo’s (NASDAQ: PTLO) jumped 4.3% in the afternoon session after investors cheered a government report showing that inflation remained steady in July. The steady inflation figures have fueled expectations that the Federal Reserve may soon consider an interest rate cut to stimulate the economy, a move that would likely benefit consumer discretionary spending, including dining out.
The July Consumer Price Index (CPI) rose 2.7% from a year earlier, meeting the previous month's pace and coming in slightly below economists' expectations of a 2.8% increase. On a monthly basis, the CPI rose 0.2%, a slowdown from the 0.3% increase seen in June. While the cost of dining out continued to climb, rising 0.3% in July, this was offset by a 0.1% dip in grocery prices, contributing to the overall stable inflation picture. The market's positive reaction sent major stock indexes, including the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite, soaring. This optimism spilled over into the restaurant sector, which has been grappling with a challenging macroeconomic environment marked by high costs and concerns over consumer traffic.
After the initial pop the shares cooled down to $8.19, up 4.3% from previous close.
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What Is The Market Telling Us
Portillo’s shares are extremely volatile and have had 30 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 11 days ago when the stock dropped 4.5% on the news that a surprisingly weak U.S. jobs report and renewed fears over international trade policy fueled concerns about a slowdown in consumer spending. The July 2025 jobs report revealed that hiring slowed dramatically, with the U.S. economy adding only 73,000 new jobs—the weakest gain in over two years. Furthermore, job numbers for May and June were revised significantly lower, suggesting the labor market is weaker than previously thought. This is a critical headwind for restaurants, as a shaky job market often leads consumers to cut back on discretionary spending like dining out. Compounding the issue, the announcement of new U.S. tariffs on trading partners has heightened fears of inflation and a broader economic slowdown, prompting investors to sell shares in consumer-facing sectors.
Portillo's is down 11.7% since the beginning of the year, and at $8.19 per share, it is trading 46.8% below its 52-week high of $15.39 from February 2025. Investors who bought $1,000 worth of Portillo’s shares at the IPO in October 2021 would now be looking at an investment worth $281.32.
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