What Happened?
A number of stocks jumped in the morning session after an in-line inflation report fueled hopes for interest rate cuts and the U.S. and China agreed to extend their tariff truce. The Consumer Price Index (CPI), a key measure of inflation, came in largely as expected, holding steady at 2.7% year-over-year. This reading boosted investor optimism that the Federal Reserve will have room to lower interest rates at its next meeting, which could reduce borrowing costs for companies and consumers.
Adding to the positive sentiment, the U.S. and China extended their tariff truce for another 90 days. This development alleviates concerns about renewed trade tensions, which is a significant relief for industrial companies reliant on global supply chains and international sales. Together, these events create a favorable outlook for economic growth, benefiting 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:
- Construction Machinery company Terex (NYSE: TEX) jumped 4.5%. Is now the time to buy Terex? 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.
- Heavy Transportation Equipment company Wabash (NYSE: WNC) jumped 9%. Is now the time to buy Wabash? Access our full analysis report here, it’s free.
- Ground Transportation company Old Dominion Freight Line (NASDAQ: ODFL) jumped 3.9%. Is now the time to buy Old Dominion Freight Line? Access our full analysis report here, it’s free.
- Specialty Equipment Distributors company Alta (NYSE: ALTG) jumped 5.3%. Is now the time to buy Alta? Access our full analysis report here, it’s free.
Zooming In On Wabash (WNC)
Wabash’s shares are extremely volatile and have had 32 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 18 days ago when the stock dropped 8.2% on the news that the company reported weaker-than-expected full-year guidance that overshadowed its second-quarter results. The transportation equipment manufacturer reported a second-quarter adjusted loss of $0.15 per share on revenue of $459 million, both of which were better than analyst expectations. However, investors focused on the company's significantly weakened outlook for the rest of the year. Wabash cut its full-year 2025 revenue forecast to approximately $1.6 billion, well below the $1.71 billion analysts had anticipated. It also lowered its adjusted earnings per share (EPS) guidance to a loss between $1.00 and $1.30, a substantial drop from the consensus estimate of a $0.75 loss. Management pointed to a challenging market, with CEO Brent Yeagy stating that "demand remains muted across the trailer industry." The company's backlog also fell by 23.1% year-over-year, signaling a slowdown in future business.
Wabash is down 38.1% since the beginning of the year, and at $10.52 per share, it is trading 48.1% below its 52-week high of $20.26 from December 2024. Investors who bought $1,000 worth of Wabash’s shares 5 years ago would now be looking at an investment worth $804.28.
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