What Happened?
A number of stocks jumped in the afternoon session after President Trump announced a two-week suspension of attacks on Iran, resulting in a 17% drop in crude oil prices.
This geopolitical reprieve was expected to significantly lower the global risk premium, sparking a massive rally in the financial sector. Investors likely pivoted back to banks as the "risk-on" sentiment returned, buoyed by the prospect of a "double-sided" ceasefire and the reopening of the Strait of Hormuz. The banking sector also benefits from this stability through a reduction in credit risk and an improved outlook for global lending.
As energy-driven inflation fears subside due to falling oil prices, the pressure on the Federal Reserve to raise interest rates may ease. Furthermore, a calmer geopolitical climate typically spurs investment banking activity, including M&A and IPOs, as corporate confidence returned.
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 First BanCorp (NYSE: FBP) jumped 3.7%. Is now the time to buy First BanCorp? Access our full analysis report here, it’s free.
- Regional Banks company First Financial Bancorp (NASDAQ: FFBC) jumped 3.7%. Is now the time to buy First Financial Bancorp? Access our full analysis report here, it’s free.
- Regional Banks company Texas Capital Bank (NASDAQ: TCBI) jumped 3.8%. Is now the time to buy Texas Capital Bank? Access our full analysis report here, it’s free.
Zooming In On Texas Capital Bank (TCBI)
Texas Capital Bank’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 biggest move we wrote about over the last year was about 1 month ago when the stock dropped 6.8% on the news that hotter-than-expected inflation data and rising concerns over credit risk rattled investors.
January's Producer Price Index (PPI), a measure of wholesale inflation, rose 0.5% against expectations of 0.3%, with the core component jumping 0.8%. This report fuels the narrative of "sticky inflation," suggesting the Federal Reserve may have limited room to cut interest rates.
Compounding these worries are growing anxieties in the credit markets. According to a Bank of America strategist, problem loans are an increasing concern that could pressure lenders. Investors are reassessing credit risk, particularly in private-credit and leveraged-loan markets, weighing on the valuations of banks sensitive to the economic cycle.
Texas Capital Bank is up 9.9% since the beginning of the year, and at $100.76 per share, it is trading close to its 52-week high of $105.98 from February 2026. Investors who bought $1,000 worth of Texas Capital Bank’s shares 5 years ago would now be looking at an investment worth $1,521.
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