What Happened?

A number of stocks fell in the morning session after the latest industrial production report showed slower-than-expected growth for July. Data from the Federal Reserve indicated that U.S. industrial production rose by 0.2%, which was half of the 0.4% increase that analysts polled by The Wall Street Journal had anticipated. While this marked the second consecutive month of growth, it represented a slowdown from the previous month's revised figures. Manufacturing output also saw a modest 0.2% increase. This weaker-than-forecast data can raise concerns among investors about cooling economic activity and potentially softening demand for manufactured goods, which directly impacts the outlook for companies across the industrial sector.

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:

• Professional Tools and Equipment company Kennametal (NYSE: KMT) fell 2.8%. Is now the time to buy Kennametal? Access our full analysis report here, it’s free.
• Custom Parts Manufacturing company Proto Labs (NYSE: PRLB) fell 3.7%. Is now the time to buy Proto Labs? Access our full analysis report here, it’s free.
• Commercial Building Products company Johnson Controls (NYSE: JCI) fell 3.1%. Is now the time to buy Johnson Controls? Access our full analysis report here, it’s free.

Zooming In On Proto Labs (PRLB)

Proto Labs’s shares are quite volatile and have had 15 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 biggest move we wrote about over the last year was 6 months ago when the stock gained 27.5% on the news that the broader market rebounded from a tech-driven sell-off, with investors taking the opportunity to buy stocks at lower prices. This rally was fueled by a recovery in technology stocks and a significant bounce in Bitcoin, which stabilized after losing over half its value from its October peak.

Investor sentiment was also lifted by a surprising improvement in U.S. consumer sentiment and the realization that massive AI-related capital expenditure, such as Amazon's planned $200 billion, directly benefits chipmakers like Nvidia and Broadcom. These "pick-and-shovel" winners jumped as much as 7%, helping the S&P 500 edge back into positive territory for 2026. The highlight of the day was the Dow Jones Industrial Average, which surged and crossed the historic 50,000 threshold for the first time.

Proto Labs is up 69.5% since the beginning of the year, and at $87.04 per share, it is trading close to its 52-week high of $92.32 from August 2026. Investors who bought $1,000 worth of Proto Labs’s shares 5 years ago would now be looking at an investment worth $1,251.

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