What Happened?
A number of stocks jumped in the afternoon session after comments from a key Federal Reserve official boosted hopes for an interest rate cut. New York Federal Reserve President John Williams stated he sees “room for a further adjustment” in the near term, sparking a significant market rally. Following his remarks, the probability of the central bank cutting rates at its December meeting jumped from 39% to over 73%, according to the CME FedWatch tool. This positive sentiment provided relief to markets amid concerns over high valuations, particularly in AI-related stocks.
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 WesBanco (NASDAQ:WSBC) jumped 4.6%. Is now the time to buy WesBanco? Access our full analysis report here, it’s free for active Edge members.
- Regional Banks company Valley National Bank (NASDAQ:VLY) jumped 4.3%. Is now the time to buy Valley National Bank? Access our full analysis report here, it’s free for active Edge members.
- Regional Banks company Renasant (NYSE:RNST) jumped 4.4%. Is now the time to buy Renasant? Access our full analysis report here, it’s free for active Edge members.
- Regional Banks company National Bank Holdings (NYSE:NBHC) jumped 4.3%. Is now the time to buy National Bank Holdings? Access our full analysis report here, it’s free for active Edge members.
- Thrifts & Mortgage Finance company Northwest Bancshares (NASDAQ:NWBI) jumped 4.5%. Is now the time to buy Northwest Bancshares? Access our full analysis report here, it’s free for active Edge members.
Zooming In On WesBanco (WSBC)
WesBanco’s shares are not very volatile and have only had 6 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 biggest move we wrote about over the last year was about 1 month ago when the stock dropped 5.7% on the news that disclosures from two lenders raised concerns about deteriorating loan quality across the industry.
The drop was triggered by specific incidents that have spooked investors. Zions Bancorp announced a $50 million charge-off—a debt the bank doesn't expect to collect—on a single loan. Separately, Western Alliance Bancorp revealed it was dealing with a borrower who had failed to provide proper collateral. These events are compounding existing anxieties about the regional banking sector, which is already under pressure from elevated interest rates and declining commercial real estate values. The news heightened investor concerns that more cracks could appear in borrowers' creditworthiness, potentially leading to increased loan losses and reduced profitability for other banks in the sector.
WesBanco is down 1.6% since the beginning of the year, and at $31.39 per share, it is trading 15.3% below its 52-week high of $37.08 from February 2025. Investors who bought $1,000 worth of WesBanco’s shares 5 years ago would now be looking at an investment worth $1,071.
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