What Happened?
A number of stocks jumped in the afternoon session after investors scooped up equities, shaking off the initial concerns inferred from the Fed's dot plot, with tech stocks leading the charge.
As a reminder, the Federal Reserve cut its benchmark interest rate by 25 basis points yesterday and signaled that more reductions could come before year-end and beyond. Initially when the cut was announced and Fed Chair Powell held his press conference, there was a pullback in the market as the Fed's "dot plot" revealed that only one cut was likely for 2026. This was below the three cuts that had been priced into the markets. This was the first interest rate cut of 2025, a move investors had widely anticipated. In response to the decision, stocks rose significantly, positioning major indexes like the S&P 500 and Nasdaq to open at record levels.
The Fed's decision was influenced by signs of a weakening labor market. Lower interest rates are generally seen as positive for stocks because they reduce borrowing costs for businesses and make fixed-income investments like bonds less attractive by comparison, driving capital into the equity market. While Fed Chair Powell noted the path forward has risks, the prospect of looser monetary policy has fueled optimism on Wall Street.
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 Independent Bank (NASDAQ: INDB) jumped 3.3%. Is now the time to buy Independent Bank? Access our full analysis report here, it’s free.
- Regional Banks company Hope Bancorp (NASDAQ: HOPE) jumped 3.3%. Is now the time to buy Hope Bancorp? Access our full analysis report here, it’s free.
- Regional Banks company Customers Bancorp (NYSE: CUBI) jumped 2.8%. Is now the time to buy Customers Bancorp? Access our full analysis report here, it’s free.
- Regional Banks company Community Bank (NYSE: CBU) jumped 3.2%. Is now the time to buy Community Bank? Access our full analysis report here, it’s free.
- Regional Banks company Coastal Financial (NASDAQ: CCB) jumped 4%. Is now the time to buy Coastal Financial? Access our full analysis report here, it’s free.
Zooming In On Coastal Financial (CCB)
Coastal Financial’s shares are quite volatile and have had 19 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 13 days ago when the stock dropped 4.1% on the news that a weaker-than-expected August jobs report heightened concerns about the health of the U.S. economy.
The U.S. economy added only 22,000 jobs last month, significantly missing economists' expectations of 75,000, while the unemployment rate ticked up to 4.3%. While this dismal report reinforced investor bets that the Federal Reserve will cut its benchmark interest rate at its next meeting to stimulate the economy, the optimism was short-lived. The sharp and unexpected cooling of the labor market triggered fears of a more pronounced economic slowdown, with some investors worried the Fed may now be acting too late to prevent further weakness. This concern overshadowed the prospect of policy easing, leading to a flight to the safety of government bonds and pushing Treasury yields to their lowest levels in five months.
Coastal Financial is up 36.2% since the beginning of the year, and at $115.39 per share, it is trading close to its 52-week high of $115.88 from September 2025. Investors who bought $1,000 worth of Coastal Financial’s shares 5 years ago would now be looking at an investment worth $7,909.
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