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  • Professor Andrea M. Armani, University of Southern California
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  • Professor Xuchen Wang, Harbin Engineering University
  • Professor Stefan Witte, Delft University of Technology

Why Valley National Bank (VLY) Stock Is Up Today

VLY Cover Image

What Happened?

Shares of regional banking company Valley National Bancorp (NASDAQ: VLY) jumped 4.5% in the afternoon session after the broader market rallied as a favorable inflation report boosted optimism for a potential interest rate cut by the Federal Reserve. The positive market sentiment was triggered by the July Consumer Price Index report, which showed annual inflation holding steady at 2.7%, slightly better than economists had anticipated. This news fueled optimism for a potential interest rate cut from the Federal Reserve, sending major indexes like the S&P 500 and Nasdaq to new all-time highs. Bank stocks, which are highly sensitive to interest rate expectations, joined the broader market rally. While higher interest rates can sometimes increase bank profits, the prospect of a stable or declining rate environment can reduce fears of an economic slowdown, which is generally positive for financial institutions.

The shares closed the day at $9.75, up 4.6% from previous close.

Is now the time to buy Valley National Bank? Access our full analysis report here, it’s free.

What Is The Market Telling Us

Valley National Bank’s shares are not very volatile and have only had 7 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 11 days ago when the stock dropped 3.5% on the news that a surprisingly weak July jobs report and the announcement of sweeping new tariffs fueled fears of an economic slowdown and an impending interest rate cut. The U.S. economy added just 73,000 jobs in July, the weakest gain in over two years, while the unemployment rate rose to 4.2%. This dismal data significantly increased market expectations for a Federal Reserve interest rate cut, with traders now pricing in an 80% probability of a cut in September. Lower interest rates typically harm bank profitability by compressing their net interest margins—the difference between what they earn on loans and pay on deposits. Compounding these worries, the announcement of new tariffs on imports from 92 countries has sparked fears of a global trade war, which could further dampen economic growth and disrupt supply chains, creating a challenging environment for the banking industry.

Valley National Bank is up 9.2% since the beginning of the year, but at $9.75 per share, it is still trading 9.6% below its 52-week high of $10.78 from November 2024. Investors who bought $1,000 worth of Valley National Bank’s shares 5 years ago would now be looking at an investment worth $1,201.

Here at StockStory, we certainly understand the potential of thematic investing. Diverse winners from Microsoft (MSFT) to Alphabet (GOOG), Coca-Cola (KO) to Monster Beverage (MNST) could all have been identified as promising growth stories with a megatrend driving the growth. So, in that spirit, we’ve identified a relatively under-the-radar profitable growth stock benefiting from the rise of AI, available to you FREE via this link.

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