What Happened?
A number of stocks fell in the afternoon session after the broader U.S. stock market declined amid investor caution and a pullback in technology stocks.
The main story? Investors are cashing in on a good run and feeling a bit cautious. After a fantastic run, many of those high-flying AI and technology stocks saw investors take profits: selling shares to lock in their gains. This is often called a "market rotation." Money is moving out of the red-hot tech sector (which some worry has become too expensive) and into other parts of the market that investors may currently deem more stable or reasonably-priced.
There's a secondary reason for the cautious mood: The long government shutdown came to an end. Though it's typically interpreted as good news, it also means a flood of delayed economic reports will be released. For weeks, investors were "flying blind" without key updates on the economy's health, like inflation data and the jobs report. In typical "sell the news" fashion, investors may also be taking profits and selling in anticipation that the new data would potentially give the Federal Reserve reasons to slow or even pause future rate cuts.
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:
- Renewable Energy company Plug Power (NASDAQ: PLUG) fell 10.2%. Is now the time to buy Plug Power? Access our full analysis report here, it’s free for active Edge members.
- Maintenance and Repair Distributors company DXP (NASDAQ: DXPE) fell 12.7%. Is now the time to buy DXP? Access our full analysis report here, it’s free for active Edge members.
- Construction and Maintenance Services company Primoris (NYSE: PRIM) fell 5.6%. Is now the time to buy Primoris? Access our full analysis report here, it’s free for active Edge members.
- Renewable Energy company Shoals (NASDAQ: SHLS) fell 8.7%. Is now the time to buy Shoals? Access our full analysis report here, it’s free for active Edge members.
- Electronic Components company nLIGHT (NASDAQ: LASR) fell 7.4%. Is now the time to buy nLIGHT? Access our full analysis report here, it’s free for active Edge members.
Zooming In On DXP (DXPE)
DXP’s shares are very volatile and have had 23 moves greater than 5% over the last year. But moves this big are rare even for DXP and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 7 days ago when the stock dropped 17.8% on the news that the company reported third-quarter results that showed a significant miss on profit expectations. While the industrial distributor's sales grew 8.6% year-over-year to $513.7 million, beating analyst estimates, its adjusted earnings did not meet forecasts. The company posted an adjusted profit of $1.34 per share, which was 14.4% below the consensus estimate of $1.57 per share. The market reacted negatively to the earnings shortfall, overlooking the better-than-expected revenue. This suggested that investors were more focused on profitability, and the failure to meet profit expectations led to a sharp sell-off in the shares.
DXP is up 3% since the beginning of the year, but at $86.91 per share, it is still trading 31.9% below its 52-week high of $127.63 from October 2025. Investors who bought $1,000 worth of DXP’s shares 5 years ago would now be looking at an investment worth $4,099.
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