What Happened?
A number of stocks jumped in the afternoon session after major banks and asset managers reported first-quarter earnings that surpassed Wall Street expectations.
Leading the charge, giants like BlackRock, Bank of America, and Morgan Stanley all announced profits that topped analyst forecasts, driven by a significant rebound in investment banking and robust trading activity. According to reports, Bank of America saw record equities trading, with revenues up 30%, while Morgan Stanley's trading desk saw a 25% rise. This surge was partly due to recent market volatility, which increases trading volumes and generates higher revenues for these firms. Additionally, a healthier climate for mergers and acquisitions bolstered investment banking divisions, signaling renewed corporate confidence and providing a powerful tailwind for the financial industry to start the year.
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:
- Personal Loan company Affirm (NASDAQ: AFRM) jumped 6.6%. Is now the time to buy Affirm? Access our full analysis report here, it’s free.
- Personal Loan company SoFi (NASDAQ: SOFI) jumped 4.4%. Is now the time to buy SoFi? Access our full analysis report here, it’s free.
- Custody Bank company StepStone Group (NASDAQ: STEP) jumped 5.4%. Is now the time to buy StepStone Group? Access our full analysis report here, it’s free.
- Asset Management company Ares (NYSE: ARES) jumped 6%. Is now the time to buy Ares? Access our full analysis report here, it’s free.
- Financial Exchanges & Data company Morningstar (NASDAQ: MORN) jumped 5.2%. Is now the time to buy Morningstar? Access our full analysis report here, it’s free.
Zooming In On Affirm (AFRM)
Affirm’s shares are extremely volatile and have had 47 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 15 days ago when the stock gained 3% on the news that reports revealed President Trump was willing to end the military conflict with Iran.
The news, reported by The Wall Street Journal, indicated the president's willingness to wind down hostilities, which sent U.S. stocks soaring across the board. An end to the war would significantly lower geopolitical risk and uncertainty, a positive development for the global economy. For the financial sector, a more stable economic environment often translates into stronger loan growth and better credit quality. Lower energy prices resulting from de-escalation can also boost consumer spending and business investment, further benefiting banks and other financial institutions.
Affirm is down 19.6% since the beginning of the year, and at $59.49 per share, it is trading 35.5% below its 52-week high of $92.18 from September 2025. Investors who bought $1,000 worth of Affirm’s shares 5 years ago would now be looking at only $866.32.
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