What Happened?
Shares of regional banking company Western Alliance Bancorporation (NYSE: WAL) rose in the morning session after the stock rebounded from a sharp sell-off the previous day that was triggered by the disclosure of a lawsuit concerning alleged loan fraud.
Shares had plunged nearly 11% after the bank revealed it had sued a borrower, Cantor Group V, LLC. However, the stock recovered as investors weighed the company's response. Western Alliance stated it believed existing collateral covered the loan amount and reaffirmed its financial guidance and outlook for 2025. This reassurance, coupled with positive commentary from analysts, appeared to calm investor fears. Several firms, including Bank of America, JPMorgan, and RBC Capital, maintained their positive ratings on the stock, signaling confidence in the bank's position despite the legal issue.
After the initial pop the shares cooled down to $72.09, up 2.5% from previous close.
Is now the time to buy Western Alliance Bancorporation? Access our full analysis report here.
What Is The Market Telling Us
Western Alliance Bancorporation’s shares are quite volatile and have had 18 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 3 days ago when the stock gained 4.8% on the news that the earnings season got off to a strong start as several big banks reported third-quarter results that surpassed Wall Street's expectations. The positive results were driven by a rebound in investment banking and strong trading desk performance. JPMorgan Chase reported a significant jump in profit and revenue, boosted by increased trading and dealmaking. Similarly, Wells Fargo saw its shares climb after reporting strong net interest income and raising its guidance. Citigroup also exceeded revenue estimates across all its business lines. While Goldman Sachs also beat expectations, its shares dipped slightly on news of potential job cuts aimed at curbing costs. Overall, the strong reports from these financial giants suggest a healthy pickup in corporate activity and trading. Also, Fed Chair Jerome Powell gave investors a major reason for optimism by suggesting the Fed could soon stop its quantitative tightening (QT) program. For months, this policy acted like a brake on the economy, systematically draining cash from the financial system to cool inflation. Powell's comments signal that the Fed may be ready to ease its pressure, which would leave more liquidity in the market to flow into assets like stocks.
Western Alliance Bancorporation is down 13% since the beginning of the year, and at $72.09 per share, it is trading 25% below its 52-week high of $96.10 from November 2024. Investors who bought $1,000 worth of Western Alliance Bancorporation’s shares 5 years ago would now be looking at an investment worth $1,947.
Unless you’ve been living under a rock, it should be obvious by now that generative AI is going to have a huge impact on how large corporations do business. While Nvidia and AMD are trading close to all-time highs, we prefer a lesser-known (but still profitable) semiconductor stock benefiting from the rise of AI. Click here to access our free report on our favorite semiconductor growth story.
