What Happened?
A number of stocks fell in the afternoon session after reports revealed a surprisingly discouraging update on inflation at the wholesale level.
The report showed inflation was at 2.9% last month, significantly higher than economists had anticipated. This unexpected rise rattled investors, as it could influence the Federal Reserve's monetary policy. The central bank has been considering interest rate cuts, which are generally seen as a way to boost the economy and support investment prices. However, with inflation proving more persistent than expected, the Fed may be persuaded to delay these cuts for a longer period. This potential delay creates uncertainty in the market, leading to a broad sell-off as traders reassess the outlook for corporate profits and economic growth in a higher-rate environment.
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:
- Regional Banks company Zions Bancorporation (NASDAQ: ZION) fell 7.9%. Is now the time to buy Zions Bancorporation? Access our full analysis report here, it’s free.
- Regional Banks company Western Alliance Bancorporation (NYSE: WAL) fell 10.1%. Is now the time to buy Western Alliance Bancorporation? Access our full analysis report here, it’s free.
- Regional Banks company The Bancorp (NASDAQ: TBBK) fell 6.8%. Is now the time to buy The Bancorp? Access our full analysis report here, it’s free.
- Regional Banks company Live Oak Bancshares (NYSE: LOB) fell 7.5%. Is now the time to buy Live Oak Bancshares? Access our full analysis report here, it’s free.
- Regional Banks company Columbia Banking System (NASDAQ: COLB) fell 6.4%. Is now the time to buy Columbia Banking System? Access our full analysis report here, it’s free.
Zooming In On Western Alliance Bancorporation (WAL)
Western Alliance Bancorporation’s shares are somewhat volatile and have had 14 moves greater than 5% over the last year. But moves this big are rare even for Western Alliance Bancorporation and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 6 months ago when the stock gained 8.3% on the news that the major indices rebounded, as Fed Chair Jerome Powell delivered dovish remarks at the much-awaited Jackson Hole symposium. Powell suggested that with inflation risks moderating and unemployment remaining low, the Federal Reserve might consider a shift in its monetary policy stance, including potential interest rate cuts. This outlook eased market concerns about prolonged high interest rates and their impact on economic growth. The prospect of lower borrowing costs bolstered investor confidence, particularly in sectors that have lagged, leading to a broad rally across the market.
Western Alliance Bancorporation is down 6.1% since the beginning of the year, and at $80.30 per share, it is trading 16.4% below its 52-week high of $96.08 from February 2026. Investors who bought $1,000 worth of Western Alliance Bancorporation’s shares 5 years ago would now be looking at an investment worth $839.40.
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