January’s Producer Price Index climbed more than anticipated, with core inflation excluding food and energy showing a significant uptick. This data reinforced expectations of persistent inflation, triggering an 8.9% sell-off in Axos Financial shares to $86.85 as investors reassessed bank profitability under higher rates.

Stubborn wholesale inflation raises concerns that the Federal Reserve will have limited scope to cut rates soon, potentially compressing net interest margins for lenders. Axos’s digital banking model could face narrowing spreads if borrowing costs remain elevated and deposit yields stay competitive.

Axos stock has experienced only eight swings greater than 5% over the past year, underscoring the market’s view that today’s move is notable. At $86.85, shares trade 14% below the 52-week high of $101.01, reflecting heightened risk sentiment in the regional banking sector.