What Happened?

A number of stocks fell in the afternoon session after investors grew increasingly concerned about the sector's exposure to the opaque private credit market. 

These jitters were fueled by specific events that raised red flags about potential risks. Western Alliance Bancorporation announced it was writing off a $126.4 million loan after a counterparty group, led by Jefferies Financial Group, defaulted on a payment agreement. This news sent Western Alliance shares down more than 6%. The concerns are broader than a single loan, as a recent report noted that investment giant BlackRock had also slashed the value of a private loan in its portfolio to zero. Private credit refers to lending by non-bank institutions, a market that has grown rapidly but lacks the transparency of public markets, making investors nervous about what other hidden risks may exist on bank balance sheets.

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 Customers Bancorp (NYSE: CUBI) fell 1.8%. Is now the time to buy Customers Bancorp? Access our full analysis report here, it’s free.
• Regional Banks company Coastal Financial (NASDAQ: CCB) fell 1.6%. Is now the time to buy Coastal Financial? Access our full analysis report here, it’s free.
• Regional Banks company Byline Bancorp (NYSE: BY) fell 2.4%. Is now the time to buy Byline Bancorp? Access our full analysis report here, it’s free.
• Regional Banks company BOK Financial (NASDAQ: BOKF) fell 2.2%. Is now the time to buy BOK Financial? Access our full analysis report here, it’s free.
• Thrifts & Mortgage Finance company Walker & Dunlop (NYSE: WD) fell 3.7%. Is now the time to buy Walker & Dunlop? Access our full analysis report here, it’s free.

Zooming In On Walker & Dunlop (WD)

Walker & Dunlop’s shares are somewhat volatile and have had 14 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 7 days ago when the stock dropped 7.5% on the news that reports revealed a surprisingly discouraging update on inflation at the wholesale level. 

The report showed inflation was at 2.9% last month, significantly higher than economists had anticipated. This unexpected rise rattled investors, as it could influence the Federal Reserve's monetary policy. The central bank has been considering interest rate cuts, which are generally seen as a way to boost the economy and support investment prices. However, with inflation proving more persistent than expected, the Fed may be persuaded to delay these cuts for a longer period. This potential delay creates uncertainty in the market, leading to a broad sell-off as traders reassess the outlook for corporate profits and economic growth in a higher-rate environment.

Walker & Dunlop is down 17.7% since the beginning of the year, and at $48.34 per share, it is trading 45% below its 52-week high of $87.97 from March 2025. Investors who bought $1,000 worth of Walker & Dunlop’s shares 5 years ago would now be looking at an investment worth $486.07.

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