What Happened?

A number of stocks fell in the afternoon 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:

• Aerospace company Astronics (NASDAQ: ATRO) fell 4.1%. Is now the time to buy Astronics? Access our full analysis report here, it’s free.
• Electronic Components company nLIGHT (NASDAQ: LASR) fell 4.4%. Is now the time to buy nLIGHT? Access our full analysis report here, it’s free.
• General Industrial Machinery company Kadant (NYSE: KAI) fell 4.3%. Is now the time to buy Kadant? Access our full analysis report here, it’s free.
• Waste Management company Montrose (NYSE: MEG) fell 3.6%. Is now the time to buy Montrose? Access our full analysis report here, it’s free.
• Electronic Components company Novanta (NASDAQ: NOVT) fell 5%. Is now the time to buy Novanta? Access our full analysis report here, it’s free.

Zooming In On Novanta (NOVT)

Novanta’s shares are somewhat volatile and have had 12 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.

Novanta is down 21.7% since the beginning of the year, and at $118.17 per share, it is trading 35.6% below its 52-week high of $183.54 from August 2024. Investors who bought $1,000 worth of Novanta’s shares 5 years ago would now be looking at an investment worth $1,053.

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