What Happened?

A number of stocks fell in the morning session after a surprisingly weak July jobs report and the announcement of sweeping new tariffs fueled fears of an economic slowdown and an impending interest rate cut. 

The U.S. economy added just 73,000 jobs in July, the weakest gain in over two years, while the unemployment rate rose to 4.2%. This dismal data significantly increased market expectations for a Federal Reserve interest rate cut, with traders now pricing in an 80% probability of a cut in September. Lower interest rates typically harm bank profitability by compressing their net interest margins—the difference between what they earn on loans and pay on deposits. Compounding these worries, the announcement of new tariffs on imports from 92 countries has sparked fears of a global trade war, which could further dampen economic growth and disrupt supply chains, creating a challenging environment for the banking industry.

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 Provident Financial Services (NYSE: PFS) fell 3.3%. Is now the time to buy Provident Financial Services? Access our full analysis report here, it’s free.
• Regional Banks company Western Alliance Bancorporation (NYSE: WAL) fell 3.2%. Is now the time to buy Western Alliance Bancorporation? Access our full analysis report here, it’s free.
• Regional Banks company Veritex Holdings (NASDAQ: VBTX) fell 3.1%. Is now the time to buy Veritex Holdings? Access our full analysis report here, it’s free.
• Regional Banks company Valley National Bank (NASDAQ: VLY) fell 3.5%. Is now the time to buy Valley National Bank? Access our full analysis report here, it’s free.
• Regional Banks company United Community Banks (NYSE: UCB) fell 3.2%. Is now the time to buy United Community Banks? Access our full analysis report here, it’s free.

Zooming In On Valley National Bank (VLY)

Valley National Bank’s shares are not very volatile and have only had 7 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.

Valley National Bank is up 2.6% since the beginning of the year, but at $9.16 per share, it is still trading 15% below its 52-week high of $10.78 from November 2024. Investors who bought $1,000 worth of Valley National Bank’s shares 5 years ago would now be looking at an investment worth $1,233.

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