What Happened?
A number of stocks fell in the afternoon 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 F.N.B. Corporation (NYSE: FNB) fell 3.1%. Is now the time to buy F.N.B. Corporation? Access our full analysis report here, it’s free.
- Regional Banks company Enterprise Financial Services (NASDAQ: EFSC) fell 3.1%. Is now the time to buy Enterprise Financial Services? Access our full analysis report here, it’s free.
- Regional Banks company East West Bank (NASDAQ: EWBC) fell 3.1%. Is now the time to buy East West Bank? Access our full analysis report here, it’s free.
- Regional Banks company CVB Financial (NASDAQ: CVBF) fell 3%. Is now the time to buy CVB Financial? Access our full analysis report here, it’s free.
- Regional Banks company Customers Bancorp (NYSE: CUBI) fell 3.1%. Is now the time to buy Customers Bancorp? Access our full analysis report here, it’s free.
Zooming In On F.N.B. Corporation (FNB)
F.N.B. Corporation’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 previous big move we wrote about was 14 days ago when the stock gained 4.7% on the news that the company reported better-than-expected second-quarter financial results. The financial services company announced record quarterly revenue of $438 million and earnings of $0.36 per diluted common share. These figures surpassed analyst expectations, which had estimated revenue of $424.37 million and earnings per share of $0.34. The strong performance was driven by a 6.5% linked-quarter increase in revenue, fueled by growth in both net interest income and non-interest income. Net interest income reached a record $347.2 million, a 9.9% increase from the year-ago quarter. The bank also saw solid balance sheet growth, with average loans and deposits increasing year-over-year by 3.7% and 7.3%, respectively. F.N.B. Corporation's capital levels also strengthened to all-time highs.
F.N.B. Corporation is up 2.2% since the beginning of the year, but at $14.86 per share, it is still trading 14.1% below its 52-week high of $17.29 from November 2024. Investors who bought $1,000 worth of F.N.B. Corporation’s shares 5 years ago would now be looking at an investment worth $2,010.
Today’s young investors won’t have read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next.
