What Happened?

A number of stocks fell in the morning session after an unexpectedly sharp rise in wholesale inflation fueled concerns about rising costs and their impact on corporate profits. The primary catalyst was the July 2025 Producer Price Index (PPI), a measure of inflation at the wholesale level, which jumped 0.9% against forecasts of a 0.2% rise. This represents the most significant monthly increase in over three years, pointing to mounting cost pressures for manufacturers, with tariffs cited as a key factor. This data complicates the Federal Reserve's upcoming interest rate decisions, as persistent inflation may prevent rate cuts, creating a headwind for cyclical sectors like Industrials.

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:

• Law Enforcement Suppliers company Cadre (NYSE: CDRE) fell 3.4%. Is now the time to buy Cadre? Access our full analysis report here, it’s free.
• Engineered Components and Systems company Graham Corporation (NYSE: GHM) fell 3.4%. Is now the time to buy Graham Corporation? Access our full analysis report here, it’s free.
• Infrastructure Distributors company MRC Global (NYSE: MRC) fell 3.1%. Is now the time to buy MRC Global? Access our full analysis report here, it’s free.
• Heavy Transportation Equipment company Trinity (NYSE: TRN) fell 3.3%. Is now the time to buy Trinity? Access our full analysis report here, it’s free.
• Renewable Energy company American Superconductor (NASDAQ: AMSC) fell 3.2%. Is now the time to buy American Superconductor? Access our full analysis report here, it’s free.

Zooming In On Graham Corporation (GHM)

Graham Corporation’s shares are very volatile and have had 22 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 biggest move we wrote about over the last year was 6 months ago when the stock dropped 22.2% on the news that the company reported underwhelming fourth quarter results: its revenue missed and its full-year revenue guidance fell slightly short of Wall Street's estimates. Orders fell significantly, reflecting the lumpiness of large capital projects, particularly in defense, which could impact near-term revenue growth. Backlogs, another leading growth indicator, declined sequentially and relative to the previous year, suggesting the near-term sales momentum might be weaker. Despite these challenges, Graham Corporation beat analysts' EBITDA and EPS expectations this quarter, partially offsetting the otherwise underwhelming results.

Graham Corporation is up 15.9% since the beginning of the year, but at $51.14 per share, it is still trading 11% below its 52-week high of $57.43 from August 2025. Investors who bought $1,000 worth of Graham Corporation’s shares 5 years ago would now be looking at an investment worth $3,747.

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