What Happened?
A number of stocks jumped in the afternoon session after investors scooped up equities, shaking off the initial concerns inferred from the Fed's dot plot, with tech stocks leading the charge.
As a reminder, the Federal Reserve cut its benchmark interest rate by 25 basis points yesterday and signaled that more reductions could come before year-end and beyond. Initially when the cut was announced and Fed Chair Powell held his press conference, there was a pullback in the market as the Fed's "dot plot" revealed that only one cut was likely for 2026. This was below the three cuts that had been priced into the markets. This was the first interest rate cut of 2025, a move investors had widely anticipated. In response to the decision, stocks rose significantly, positioning major indexes like the S&P 500 and Nasdaq to open at record levels.
The Fed's decision was influenced by signs of a weakening labor market. Lower interest rates are generally seen as positive for stocks because they reduce borrowing costs for businesses and make fixed-income investments like bonds less attractive by comparison, driving capital into the equity market. While Fed Chair Powell noted the path forward has risks, the prospect of looser monetary policy has fueled optimism on Wall Street.
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 Cadence Bank (NYSE:CADE) jumped 3.2%. Is now the time to buy Cadence Bank? Access our full analysis report here, it’s free.
- Regional Banks company BancFirst (NASDAQ:BANF) jumped 2.6%. Is now the time to buy BancFirst? Access our full analysis report here, it’s free.
- Regional Banks company Banc of California (NYSE:BANC) jumped 3.5%. Is now the time to buy Banc of California? Access our full analysis report here, it’s free.
- Regional Banks company Axos Financial (NYSE:AX) jumped 3.9%. Is now the time to buy Axos Financial? Access our full analysis report here, it’s free.
- Regional Banks company Amalgamated Financial (NASDAQ:AMAL) jumped 2.8%. Is now the time to buy Amalgamated Financial? Access our full analysis report here, it’s free.
Zooming In On Axos Financial (AX)
Axos Financial’s shares are not very volatile and have only had 9 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was 27 days ago when the stock gained 6% 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.
Axos Financial is up 32.1% since the beginning of the year, and at $90.94 per share, it is trading close to its 52-week high of $92.31 from August 2025. Investors who bought $1,000 worth of Axos Financial’s shares 5 years ago would now be looking at an investment worth $3,935.
Unless you’ve been living under a rock, it should be obvious by now that generative AI is going to have a huge impact on how large corporations do business. While Nvidia and AMD are trading close to all-time highs, we prefer a lesser-known (but still profitable) semiconductor stock benefiting from the rise of AI. Click here to access our free report on our favorite semiconductor growth story.