What Happened?
A number of stocks fell in the afternoon session after the May jobs report sent the 30-year Treasury yield above 5%, a threshold that directly increases the cost of financing the large-scale grid infrastructure, data centre power distribution, and industrial electrification projects underpinning the sector's growth story.
The demand side remained intact as AI data centre construction continued to drive record orders for power conversion and switching equipment. But the financing environment for those projects deteriorated materially during the session. Utility and industrial customers commissioning large electrical infrastructure are highly sensitive to long-term borrowing costs.
A 30-year above 5% shifts the calculus on multi-year capital commitments, with the risk that order cycles lengthen and some projects are deferred. The jobs report's implication, that the Fed could hike rather than cut, removed the rate tailwind that sector investors had been counting on into the second half of 2026.
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 Sanmina (NASDAQ: SANM) fell 5.1%. Is now the time to buy Sanmina? Access our full analysis report here, it’s free.
- Electrical Systems company Methode Electronics (NYSE: MEI) fell 10%. Is now the time to buy Methode Electronics? Access our full analysis report here, it’s free.
Zooming In On Methode Electronics (MEI)
Methode Electronics’s shares are extremely volatile and have had 34 moves greater than 5% over the last year. But moves this big are rare even for Methode Electronics and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 11 months ago when the stock dropped 23.6% on the news that the company reported a wider-than-expected fourth-quarter loss and issued a disappointing financial outlook for fiscal 2026.
The electronic components maker posted a fourth-quarter adjusted loss of $0.77 per share on revenue of $257.1 million. This represents a significant decline from the prior year, driven by lower volumes in its Automotive segment. Looking ahead, Methode provided a grim forecast for its 2026 fiscal year, anticipating net sales between $900 million and $1 billion. The company attributed the expected sales decline of approximately $100 million to reduced demand for electric vehicles (EVs), particularly from a major customer, Stellantis. This guidance, which signals ongoing business challenges, appeared to overshadow some positive news, including record sales for its data center power products and a newly declared quarterly dividend.
Methode Electronics is up 68.9% since the beginning of the year, but at $11.32 per share, it is still trading 18.4% below its 52-week high of $13.87 from May 2026. Despite the year-to-date gain, investors who bought $1,000 worth of Methode Electronics’s shares 5 years ago would now be looking at only $229.73.
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