What Happened?

A number of stocks fell in the afternoon session after investors grew increasingly concerned about the sector's exposure to the opaque private credit market. These jitters were fueled by specific events that raised red flags about potential risks. 

Western Alliance Bancorporation announced it was writing off a $126.4 million loan after a counterparty group, led by Jefferies Financial Group, defaulted on a payment agreement. This news sent Western Alliance shares down more than 6%. The concerns are broader than a single loan, as a recent report noted that investment giant BlackRock had also slashed the value of a private loan in its portfolio to zero. Private credit refers to lending by non-bank institutions, a market that has grown rapidly but lacks the transparency of public markets, making investors nervous about what other hidden risks may exist on bank balance sheets.

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 Axos Financial (NYSE: AX) fell 3.9%. Is now the time to buy Axos Financial? Access our full analysis report here, it’s free.
• Regional Banks company Trustmark (NASDAQ: TRMK) fell 2.4%. Is now the time to buy Trustmark? Access our full analysis report here, it’s free.
• Regional Banks company TriCo Bancshares (NASDAQ: TCBK) fell 2.7%. Is now the time to buy TriCo Bancshares? Access our full analysis report here, it’s free.
• Regional Banks company Popular (NASDAQ: BPOP) fell 2.8%. Is now the time to buy Popular? Access our full analysis report here, it’s free.
• Regional Banks company OFG Bancorp (NYSE: OFG) fell 3%. Is now the time to buy OFG Bancorp? 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 7 days ago when the stock dropped 8.9% on the news that a key inflation report came in higher than expected, sparking a broad market sell-off that hit financial stocks particularly hard. 

The Producer Price Index (PPI) for January, a measure of inflation at the wholesale level, rose more than anticipated. The core component, which excludes volatile food and energy prices, showed a significant jump. This data reinforced the view of persistent inflation and raised concerns that the Federal Reserve would have limited room to lower interest rates in the near term. Stubbornly high interest rates can narrow the profit margins for banks and other financial firms. The negative sentiment was widespread, with the Dow, S&P 500, and Nasdaq all declining as investors grew more cautious.

Axos Financial is down 2.7% since the beginning of the year, and at $85.02 per share, it is trading 15.8% below its 52-week high of $101.01 from February 2026. Investors who bought $1,000 worth of Axos Financial’s shares 5 years ago would now be looking at an investment worth $1,737.

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