The Sydney Sweeney ad campaign got a thumbs-up from President Trump, while the company also announced a new collaboration with Travis Kelce.

Shares of American Eagle Outfitters (AEO 0.21%) rallied 19.8% in August, according to data from S&P Global Market Intelligence.

American Eagle capitalized on July’s optimism regarding its new ad campaign starring actress Sydney Sweeney when President Trump endorsed the company’s campaign in early August. Then later in the month, American Eagle announced a collaboration with Kansas City Chiefs tight end and Taylor Swift fiancée Travis Kelce.

American Eagle’s investment in celebrity pays off

American Eagle’s stock got a bump in late July when it launched a controversial ad with actress Sydney Sweeney with the byline, “Sydney Sweeney has Great Genes Jeans.” While the stock then faded after an initial lift, President Trump weighed in in early August, writing on his social media platform Truth Social that the ad was, “the HOTTEST out there…the jeans are flying off the shelves.”

In response, investors bid up the stock, thinking the controversy might boost publicity for the brand and therefore subsequent sales.

Then later in the month, American Eagle announced a limited addition collaboration with Travis Kelce’s “Tru Colors” clothing line, which Kelce began in 2019. The new limited edition collection is to be unveiled in two “drops,” with one on Aug. 27, and another upcoming on Sept. 24. As luck would have it, the collaboration announcement came one day after Kelce announced his engagement to music star Taylor Swift.

So, American Eagle nabbed a marketing coup in both late July and into August, grabbing support from the President, as well as arguably two of the biggest celebrities in sports and entertainment.

Image source: Getty Images.

What will it mean for the stock, though?

The high-profile marketing push — both planned and unplanned – appeared to boost American Eagle’s near-term outlook. On Sept. 3, the company reported its second-quarter earnings results for the quarter ending Aug. 2, beating analyst expectations even though sales and comparable-store sales were each down 1%.

However, management said it was seeing “an uptick in customer awareness, engagement and comparable sales,” as a result of the Sweeney and Kelce campaigns, and projected comps to return to positive low single digits in both Q3 and Q4. That improvement would appear to validate the impact of the Sweeney and Kelce campaigns.

That said, despite a near-20% gain in August and a 20%-plus gain in September thus far, American Eagle’s stock is only up about 12.8% on the year and is still actually 2.3% below where it was one year ago. A cautious consumer, high interest rates, and the Trump administration’s tariffs have all acted as headwinds to the clothing retailer, as it has to many retailers.

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Didn’t see that coming? You’re likely not alone. A year of tariff tussles capped off with bombs flying in the Middle East probably had most worried about their stock market portfolios.

Yet, despite the chaos, the S&P 500 has continued an epic run since it got oversold in early April following President Trump announcing tougher-than-thought tariffs on global trade partners.

Related: Wall Street veteran analyst who predicted stock market rally resets forecast

The SPDR S&P 500 ETF  (SPY)  has now marched more than 22.6% higher since President Trump paused implementing most reciprocal tariffs on April 9 for 90 days. The tech-heavy Nasdaq Composite has performed even better, rallying 30.4%.

The S&P 500 is now only 1.1% below an all-time high. The Invesco Nasdaq 100 Trust  (QQQ) , which comprises the biggest stocks in the Nasdaq, including Nvidia, is within 0.20% of an all-time high.

I bet you didn’t have that on your bingo card. Especially, last week, when worry mounted that the stock market’s run would falter under the weight of rising geopolitical worry after Israel attacked Iran, prompting daily missile fires between the two countries.

Middle East ceasefire helps send stocks soaring

The potential for the conflict to spread sent oil prices surging, and concerns seemed well founded when the US announced on June 22 it had dropped bunker busters on Iran’s Fordow nuclear facility.

Related: Analyst sends blunt 8-word message ahead of trade deal deadline

Yet, the stock market largely looked beyond the concerns as big money investors made bets that the war would be measured in days not years. 

The S&P 500 retreated just 0.46% last week, while the Nasdaq 100 was essentially flat. On Monday, when markets opened after the US bombing, stocks found their footing, surging on hopes for a ceasefire.

The gains continued on June 24, as investors increasingly became comfortable with tensions deescalating, 

The S&P 500 gained 1.1% on June 24 while the Nasdaq Composite gained 1.4% on the session.

Initially, it appeared that tempers would overcome peace, given Iran and Israel both launched additional missiles after President Trump’s ceasefire announcement.

Those actions sparked a sharp rebuke from President Trump, who laid into both countries before boarding Marine One on the White House lawn.

“I’m not happy with Israel…I’m not happy with Iran… We basically have two countries that have been fighting so long, so hard, that they don’t know what the f— they’re doing,” said Trump.

The two sides seemed to move closer to ceasefire as the day progressed.

On Polymarket, bets suggest currently suggest only a 4% chance that the important Strait of Hormuz, which handles 20% of global oil supply, would close before July. Similarly, Polymarket’s data indicates less than a 1% chance that the US declares war on Iran, and a 6% chance of another US attack on Iran before month’s end.

On June 23, veteran analyst Tom Lee suggested that the risks associated with geopolitical conflict may be priced in, setting the stage for more upside.

Ambarella  (AMBA)  was among the biggest gainers, rising 21% on takeover chatter. Coinbase  (COIN)  rallied 12% in the wake of stablecoin legislation.

Related: Veteran fund manager sends dire message on stocks

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