What Happened?
A number of stocks fell in the afternoon session after the CPI report showed 4.2% annual inflation, the highest in three years, with markets fully pricing a December Fed rate hike.
For capital-intensive industrial businesses, tighter financing conditions directly crimp investment planning and acquisition economics. The Iran conflict added supply chain pressure: Tehran targeted Bahrain, Kuwait, and Jordan with missile attacks, and Trump pledged mid-session to "attack very hard," sending the Dow to session lows.
A widening Gulf conflict raises energy input costs and introduces uncertainty across the cross-border logistics networks that manufacturing-heavy industrials depend on. Companies with exposure to global trade flows absorbed the most pressure. Defense names within the sector remained partially insulated.
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:
- Electrical Systems company Atkore (NYSE: ATKR) fell 5%. Is now the time to buy Atkore? Access our full analysis report here, it’s free.
- Heavy Transportation Equipment company Cummins (NYSE: CMI) fell 5%. Is now the time to buy Cummins? Access our full analysis report here, it’s free.
- Engineering and Design Services company MasTec (NYSE: MTZ) fell 4.2%. Is now the time to buy MasTec? Access our full analysis report here, it’s free.
Zooming In On Cummins (CMI)
Cummins’s shares are not very volatile and have only had 8 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 4 months ago when the stock dropped 12% on the news that the company reported weaker fourth-quarter results, where a significant miss on profit expectations overshadowed a revenue beat.
The company posted earnings per share of $4.27, falling 14.9% short of the $5.02 analysts had forecasted. This profit shortfall occurred despite revenue growing 1.1% year-on-year to $8.54 billion, which surpassed expectations of $8.11 billion. The lower-than-expected profitability was partly due to a decline in the company's gross profit margin, which fell to 22.9% from 25.4% in the same quarter last year. The market reacted negatively to the news, signaling that investors were more concerned with the earnings miss and contracting margins than the better-than-expected sales.
Cummins is up 21.7% since the beginning of the year, but at $635.56 per share, it is still trading 11.3% below its 52-week high of $716.45 from May 2026. Investors who bought $1,000 worth of Cummins’s shares 5 years ago would now be looking at an investment worth $2,520.
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