What Happened?

A number of stocks jumped in the afternoon session after 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.

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:

• Diversified Banks company Bank of America (NYSE: BAC) jumped 3%. Is now the time to buy Bank of America? Access our full analysis report here, it’s free for active Edge members.
• Regional Banks company Veritex Holdings (NASDAQ: VBTX) jumped 3.2%. Is now the time to buy Veritex Holdings? Access our full analysis report here, it’s free for active Edge members.
• Regional Banks company TriCo Bancshares (NASDAQ: TCBK) jumped 4.1%. Is now the time to buy TriCo Bancshares? Access our full analysis report here, it’s free for active Edge members.
• Regional Banks company Texas Capital Bank (NASDAQ: TCBI) jumped 3.9%. Is now the time to buy Texas Capital Bank? Access our full analysis report here, it’s free for active Edge members.
• Regional Banks company KeyCorp (NYSE: KEY) jumped 3.6%. Is now the time to buy KeyCorp? Access our full analysis report here, it’s free for active Edge members.

Zooming In On TriCo Bancshares (TCBK)

TriCo Bancshares’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 26 days ago when the stock gained 3.1% as 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 the previous day 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.

TriCo Bancshares is up 1.5% since the beginning of the year, but at $43.85 per share, it is still trading 11.6% below its 52-week high of $49.62 from November 2024. Investors who bought $1,000 worth of TriCo Bancshares’s shares 5 years ago would now be looking at an investment worth $1,662.

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