What Happened?
A number of stocks fell in the afternoon session after April CPI hit 3.8% and Brent oil climbed to ~$107 confirming through the consumer data what manufacturers already reported through the ISM survey.
The ISM Prices Index reached 84.6% in April, a four-year high, with input costs running 25.6 percentage points higher over just three months. The ISM Manufacturing PMI held at 52.7%, fourth straight month of expansion, but 47% of manufacturer comments mentioned the Iran war and 18% mentioned tariffs as price drivers, with sentiment 69% negative.
Manufacturers use energy throughout production, powering equipment, running furnaces, fueling delivery fleets. When oil rises, costs also rise, compressing gross margins. Rising Treasury yields added a second pressure: capital spending, new equipment, factory expansion, is typically financed with long-term debt whose cost moves with the 10-year yield. The 4.43% level was the highest in months. The hot CPI print also makes it harder for manufacturers to pass costs to customers without triggering further consumer pullback.
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 Powell (NASDAQ: POWL) fell 5%. Is now the time to buy Powell? Access our full analysis report here, it’s free.
- Renewable Energy company Array (NASDAQ: ARRY) fell 5.8%. Is now the time to buy Array? Access our full analysis report here, it’s free.
- Renewable Energy company Shoals (NASDAQ: SHLS) fell 6.9%. Is now the time to buy Shoals? Access our full analysis report here, it’s free.
- Electronic Components company Advanced Energy (NASDAQ: AEIS) fell 5.4%. Is now the time to buy Advanced Energy? Access our full analysis report here, it’s free.
- Renewable Energy company American Superconductor (NASDAQ: AMSC) fell 7.4%. Is now the time to buy American Superconductor? Access our full analysis report here, it’s free.
Zooming In On American Superconductor (AMSC)
American Superconductor’s shares are extremely volatile and have had 63 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 27 days ago when the stock dropped 4.9% as news of a potential Middle East ceasefire triggered a major shift in the stock market.
For weeks, investors held defensive and energy stocks during the conflict between the U.S. and Iran. With a peace deal being discussed, the risk of global supply chain issues decreased significantly. This caused oil prices to drop sharply, leading many traders to sell their defensive shares to lock in profits while the global situation stabilizes. Instead of holding onto traditional companies, investors rotated back into high-growth technology names.
Tech leaders like Broadcom and Tesla saw gains as the market's "fear index" hit a seven-week low. Analysts believed that a more stable global environment makes high-growth investments much more appealing than defensive industrial ones. Because of this rotation, the industrial sector trailed the rest of the market as buyers searched for bigger returns in the tech sector.
American Superconductor is up 73.5% since the beginning of the year, but at $54.79 per share, it is still trading 17.8% below its 52-week high of $66.68 from October 2025. Investors who bought $1,000 worth of American Superconductor’s shares 5 years ago would now be looking at an investment worth $4,130.
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