Wall Street ended lower overnight as weakness among US regional banks reignited investor nerves already frayed by renewed trade tensions with China.
Shares in Zions Bancorporation tumbled after the bank revealed unexpected losses on two California loans, while Western Alliance slid after launching a fraud lawsuit against a borrower — both moves stoking concern about hidden credit stress as interest rates remain high.
The S&P 500 lost or 0.6 per cent, to close at 6,629. The Nasdaq Composite fell 0.5 per cent, to 22,562, while the Dow Jones Industrial Average dropped 0.7 per cent, to 45,952.
Trade jitters also weighed on sentiment, with President Donald Trump threatening 100 per cent tariffs on Chinese imports from November 1 in retaliation for Beijing’s curbs on rare earth exports.
“The added uncertainty over trade and what it means for the economy is fuelling market instability,” said US Bank Wealth Management strategist Tom Hainlin.
Despite solid earnings from major banks, insurers dragged on the market, with Travelers and Marsh & McLennan both reporting weaker results. Analysts now expect S&P 500 earnings to rise 9.2 per cent in the third quarter, slightly higher than forecasts a fortnight ago, according to LSEG data.
Elsewhere, optimism around artificial intelligence remained a mixed force. Chipmaker TSMC lifted its AI spending outlook, but heavyweight tech names including Tesla, Meta and Palantir retreated.
After making headlines for all the wrong reasons after being targeted by cyber criminals, Salesforce, jumped after forecasting $US60 billion in revenue by 2030 — but overall, investors were reminded that even amid AI exuberance and hopes of rate cuts, fragility remains just beneath Wall Street’s surface.
– with reporting from Reuters