What Happened?
A number of stocks fell in the afternoon session after the Fed signaled rate cuts were off the table for 2026. Major Wall Street banks, including Goldman Sachs and Bank of America, pushed back their forecasts for Federal Reserve interest-rate cuts.
The revised timelines, pointed to December 2026 instead of September, after stronger-than-expected jobs and inflation data suggested the economy might not be cooling enough to warrant earlier action from the central bank. This shift in expectations led to a rise in Treasury yields. Some analysts at Bank of America even noted that the risk of the Fed hiking rates again might be 'underpriced' by the market, signaling a potentially prolonged period of higher interest rates.
Banks earn money on the difference between what they charge borrowers and pay depositors, the net interest margin. Rate cuts are a mixed signal: they compress margins but stimulate loan demand. With the Fed signaling no cuts, banks lose the demand catalyst needed to grow lending volume.
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 First Financial Bankshares (NASDAQ: FFIN) fell 2.7%. Is now the time to buy First Financial Bankshares? Access our full analysis report here, it’s free.
- Regional Banks company Glacier Bancorp (NYSE: GBCI) fell 2.6%. Is now the time to buy Glacier Bancorp? Access our full analysis report here, it’s free.
Zooming In On First Financial Bankshares (FFIN)
First Financial Bankshares’s shares are not very volatile and have only had 2 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 2 months ago when the stock dropped 6.5% on the news that hotter-than-expected inflation data and rising concerns over credit risk rattled investors.
January's Producer Price Index (PPI), a measure of wholesale inflation, rose 0.5% against expectations of 0.3%, with the core component jumping 0.8%. This report fuels the narrative of "sticky inflation," suggesting the Federal Reserve may have limited room to cut interest rates. Compounding these worries are growing anxieties in the credit markets. According to a Bank of America strategist, problem loans are an increasing concern that could pressure lenders. Investors are reassessing credit risk, particularly in private-credit and leveraged-loan markets, weighing on the valuations of banks sensitive to the economic cycle.
First Financial Bankshares is up 4.8% since the beginning of the year, but at $31.46 per share, it is still trading 17.2% below its 52-week high of $37.98 from August 2025. Despite the year-to-date gain, investors who bought $1,000 worth of First Financial Bankshares’s shares 5 years ago would now be looking at only $637.44.
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