New worries about the health of regional banks weighed on major indexes.
The Dow industrials fell 301 points, or 0.7%. The KBW Nasdaq Regional Banking index slid 6.3% after Zions Bancorp said late Wednesday that it had taken a $50 million charge-off to cover two loans taken out by borrowers facing legal actions. Meanwhile, Western Alliance said Thursday that it filed a lawsuit in August against one of its borrowers, alleging the company committed fraud.
Larger banks also lost ground following strong earnings earlier this week. Bank of America and Citigroup both fell 3.5%. Jefferies meanwhile dropped 11% as its management held an investor day amid questions about its work with the collapsed auto-parts giant First Brands.
Banking concerns sent some investors to the bond market, where Treasury prices rose, and yields fell. The benchmark 10-year yield slipped to 3.976%, its lowest since October 2024.
Chip stocks climbed, after Taiwan Semiconductor Manufacturing reported record quarterly net profits overnight, underscoring demand for the processors that power AI systems. Meanwhile, a disappointing outlook hammered HPE, while Salesforce shares were boosted by ambitious growth targets.
Federal Reserve governor Christopher Waller, one of several Fed officials who spoke today, endorsed market expectations for a rate cut later this month. But he said after that the central bank should “move with care,” given the tension between strong-looking growth and a weaker-seeming labor market.
