What Happened?
A number of stocks jumped in the afternoon session after an unexpected drop in the Producer Price Index (PPI) for August, signaled easing inflation and raised expectations for a potential Federal Reserve interest rate cut.
The U.S. Bureau of Labor Statistics reported that the PPI, which measures wholesale prices, edged down 0.1% last month, contrary to analyst expectations for a 0.3% rise. This data gives the Federal Reserve more flexibility to consider lowering interest rates to stimulate the economy. According to the CME FedWatch Tool, the probability of a quarter-point rate cut at the next Fed meeting has surged to 90%. Lower interest rates typically benefit the industrial sector by reducing borrowing costs for new projects and expansion, potentially leading to increased economic activity and demand for industrial goods.
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:
- Renewable Energy company Nextracker (NASDAQ: NXT) jumped 4.8%. Is now the time to buy Nextracker? Access our full analysis report here, it’s free.
- Electrical Systems company Atkore (NYSE: ATKR) jumped 3.8%. Is now the time to buy Atkore? Access our full analysis report here, it’s free.
- Engineering and Design Services company Dycom (NYSE: DY) jumped 3.5%. Is now the time to buy Dycom? Access our full analysis report here, it’s free.
- Renewable Energy company Array (NASDAQ: ARRY) jumped 2.9%. Is now the time to buy Array? Access our full analysis report here, it’s free.
- Engineering and Design Services company MasTec (NYSE: MTZ) jumped 7.3%. Is now the time to buy MasTec? Access our full analysis report here, it’s free.
Zooming In On MasTec (MTZ)
MasTec’s shares are quite volatile and have had 17 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 5 days ago when the stock dropped 4% on the news that a surprisingly weak August jobs report revealed the U.S. economy added far fewer jobs than anticipated. The Bureau of Labor Statistics reported that non-farm payrolls rose by just 22,000, significantly missing the 75,000 expected by economists.
Compounding the concerns, the unemployment rate climbed to 4.3%, its highest level in nearly four years. The report also included downward revisions to previous months' data, with June now showing the first net job loss since 2020. While a cooling labor market could encourage the Federal Reserve to cut interest rates, investors reacted negatively. The sharp slowdown in hiring sparked fears of a broader economic downturn, causing stocks to fall as the market weighed whether the Fed's potential actions would be enough to prevent a recession.
MasTec is up 34.4% since the beginning of the year, and at $188.15 per share, it is trading close to its 52-week high of $189.87 from July 2025. Investors who bought $1,000 worth of MasTec’s shares 5 years ago would now be looking at an investment worth $4,388.
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