What Happened?
A number of stocks fell in the afternoon session after investors kept bidding the group lower after last week’s Federal Reserve hike. On September 16, the Fed raised the federal funds target range by 25 basis points to 3.75%–4.00%, its first increase since 2023, according to the Federal Reserve’s FOMC statement. The Fed said economic activity and domestic spending remain resilient, but stressed that inflation is still elevated and that the increase is intended to support a return to its 2% inflation goal. Higher policy rates can lift yields on interest-earning assets for some lenders. The tape has stayed focused on the less favorable side of a more restrictive backdrop: slower loan demand, higher borrowing costs for consumers and businesses, potential credit deterioration, and softer capital-markets activity. Those risks are still being marked into growth-sensitive financial earnings, which is why the selling has not stopped at last Wednesday’s announcement.
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:
- Diversified Financial Services company WEX (NYSE: WEX) fell 2.8%. Is now the time to buy WEX? Access our full analysis report here, it’s free.
- Investment Banking & Brokerage company Raymond James (NYSE: RJF) fell 3.3%. Is now the time to buy Raymond James? Access our full analysis report here, it’s free.
- Student Loan company Sallie Mae (NASDAQ: SLM) fell 3%. Is now the time to buy Sallie Mae? Access our full analysis report here, it’s free.
- Custody Bank company Voya Financial (NYSE: VOYA) fell 2.8%. Is now the time to buy Voya Financial? Access our full analysis report here, it’s free.
- Investment Banking & Brokerage company Charles Schwab (NYSE: SCHW) fell 5.4%. Is now the time to buy Charles Schwab? Access our full analysis report here, it’s free.
Zooming In On Charles Schwab (SCHW)
Charles Schwab’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 7 months ago when the stock dropped 6.9% on the news that the launch of a new artificial intelligence tool by financial software provider Altruist sparked concerns about disruption in the wealth management sector. The tech platform announced a new AI-powered tax planning tool, which triggered a selloff across several wealth management stocks. The news raised worries that artificial intelligence could upend the traditional business models of financial services firms. Other companies in the sector, including Raymond James Financial and Stifel Financial, also saw their stock prices fall as investors reacted to the potential competitive threat posed by new technology.
Charles Schwab is flat since the beginning of the year, and at $101.19 per share, it is trading 11% below its 52-week high of $113.65 from August 2026. Investors who bought $1,000 worth of Charles Schwab’s shares 5 years ago would now be looking at an investment worth $1,437.
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