What Happened?
A number of stocks fell in the afternoon session after the latest Producer Price Index (PPI) report showed a 0.5% increase in January, signaling persistent inflationary pressures that could impact operating costs.
The data from the U.S. Bureau of Labor Statistics indicates that wholesale inflation is accelerating, with the index for final demand rising 2.9% over the past 12 months. For restaurants, a higher PPI often translates into increased expenses for key inputs like food, packaging, and energy. This can squeeze profit margins, particularly if establishments struggle to pass these higher costs onto price-sensitive consumers. The report highlighted that a significant portion of the monthly increase was driven by a 2.5% jump in margins for trade services, which directly reflects the prices faced by wholesalers and retailers.
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:
- Modern Fast Food company Wingstop (NASDAQ: WING) fell 4.4%. Is now the time to buy Wingstop? Access our full analysis report here, it’s free.
- Modern Fast Food company CAVA (NYSE: CAVA) fell 3.8%. Is now the time to buy CAVA? Access our full analysis report here, it’s free.
- Modern Fast Food company Shake Shack (NYSE: SHAK) fell 4.9%. Is now the time to buy Shake Shack? Access our full analysis report here, it’s free.
- Sit-Down Dining company First Watch (NASDAQ: FWRG) fell 4.5%. Is now the time to buy First Watch? Access our full analysis report here, it’s free.
- Sit-Down Dining company BJ's (NASDAQ: BJRI) fell 4.9%. Is now the time to buy BJ's? Access our full analysis report here, it’s free.
Zooming In On BJ's (BJRI)
BJ’s shares are somewhat volatile and have had 14 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 4 days ago when the stock dropped 1% on the news that the Trump administration's announcement of new global tariffs, reignited trade policy uncertainty.
The move came swiftly after the Supreme Court ruled the previous week that the president could not use the International Emergency Economic Powers Act (IEEPA) for such duties, a decision that had initially sent markets higher. However, the administration invoked a different authority, the Trade Act of 1974, to impose a 15% global tariff for up to 150 days. The rapid reimposition of trade barriers creates significant uncertainty for companies across multiple sectors that depend on international supply chains and global trade. Investors are now weighing the potential impact of these new duties on corporate earnings and broader economic activity.
BJ's is down 7.3% since the beginning of the year, and at $38.09 per share, it is trading 18.6% below its 52-week high of $46.78 from July 2025. Investors who bought $1,000 worth of BJ’s shares 5 years ago would now be looking at an investment worth $654.35.
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