What Happened?
Shares of digital banking company Axos Financial (NYSE: AX) fell 8.9% in the afternoon session after a key inflation report came in higher than expected, sparking a broad market sell-off that hit financial stocks particularly hard.
The Producer Price Index (PPI) for January, a measure of inflation at the wholesale level, rose more than anticipated. The core component, which excludes volatile food and energy prices, showed a significant jump. This data reinforced the view of persistent inflation and raised concerns that the Federal Reserve would have limited room to lower interest rates in the near term. Stubbornly high interest rates can narrow the profit margins for banks and other financial firms. The negative sentiment was widespread, with the Dow, S&P 500, and Nasdaq all declining as investors grew more cautious.
The shares closed the day at $86.85, down 8.9% from previous close.
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What Is The Market Telling Us
Axos Financial’s shares are not very volatile and have only had 8 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 4 months ago when the stock dropped 6.6% on the news that disclosures from two lenders raised concerns about deteriorating loan quality across the industry. The drop was triggered by specific incidents that have spooked investors. Zions Bancorp announced a $50 million charge-off—a debt the bank doesn't expect to collect—on a single loan. Separately, Western Alliance Bancorp revealed it was dealing with a borrower who had failed to provide proper collateral. These events are compounding existing anxieties about the regional banking sector, which is already under pressure from elevated interest rates and declining commercial real estate values. The news heightened investor concerns that more cracks could appear in borrowers' creditworthiness, potentially leading to increased loan losses and reduced profitability for other banks in the sector.
Axos Financial is flat since the beginning of the year, and at $86.85 per share, it is trading 14% below its 52-week high of $101.01 from February 2026. Investors who bought $1,000 worth of Axos Financial’s shares 5 years ago would now be looking at an investment worth $1,816.
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