Bad loans stir fresh market turmoil 17/10/2025

HOT stories for today

Market wrap:

• U.S. stocks ended lower on Wednesday, as a late-day slide in bank shares dragged them down. The Dow Jones Industrial Average fell 301.07 points, or 0.7%, while the S&P 500 dropped 0.6% and the Nasdaq Composite declined 0.5%. Beijing accused Washington of intentionally fueling panic over rare-earth export controls but said it remains open to talks. President Trump acknowledged that the U.S. is “in one now,” referring to a trade war with China. At the same time, Treasury Secretary Mnuchin indicated that the November tariff threats could still be paused if Trump and President Xi meet in Korea.
• Financial shares led losses after Zions and Western Alliance revealed an uptick in bad loans, heightening worries about loose credit standards and the risk of broader stress in the sector. Gold and silver reached record highs as investors sought safety, while Treasury yields declined. TSMC slipped nearly 2% Thursday, despite reporting results ahead of expectations and maintaining a bullish outlook for AI chip demand. The stock touched an all-time high before retreating.
• The U.S. dollar continued to weaken, with the Dollar Index extending its decline for a third straight session amid trade tensions, expectations of easier Fed policy, and renewed concern over a potential government shutdown. Bitcoin struggled to recover after a sharp selloff wiped out hundreds of billions in market value, trading below the $110,000 mark as sentiment remained fragile. Investors will get a clearer view of the regional banking landscape on Friday, with earnings due from Comerica, Fifth Third, and other lenders.

Regional bank “cockroaches” are rattling markets

• A selloff in regional lenders spread across the financial sector Thursday, pulling the S&P 500 down 0.6% as fresh credit worries hit sentiment. Zions Bancorp tumbled after disclosing a $60 million loan-loss provision tied to what it called an isolated case of potential fraud. Hours later, Western Alliance revealed a separate dispute over collateral on a credit line, fueling concerns about broader credit weakness.
• The SPDR S&P Regional Banking ETF declined 6.2%, its sharpest drop since April, while the S&P 500 financial sector fell 2.8%. Volatility surged, with the VIX jumping above 25. JPMorgan Chase CEO Jamie Dimon warned this week that “when you see one cockroach, there are probably more,” after reporting losses linked to subprime lender Tricolor. Analysts say the mounting credit hits reflect looser underwriting rather than a systemic threat, though investors remain jumpy after the 2023 SVB collapse. Credit spreads are widening and defaults are creeping higher, signaling pressure across corporate and consumer debt. Shares of private-credit firms such as Blue Owl Capital and Jefferies also came under strain. For now, Wall Street is watching nervously for the next cockroach to crawl out.

Stocks on the move:

• CSX Corporation (CSX): Shares rose 2% after quarterly results slightly topped forecasts. Adjusted earnings were $0.44 a share on $3.59 billion in revenue, edging estimates of $0.42 and $3.58 billion. Lower coal prices and merchandise volumes trimmed sales.
• Interactive Brokers Group (IBKR): The stock slipped 3% despite beating estimates with earnings of $0.57 a share on $1.61 billion in revenue. Net interest income jumped 21% to $967 million on more vigorous lending activity.
• Oracle (ORCL): Shares fell 2.4% after-hours as the company projected a 31% five-year revenue CAGR. Earlier, the stock rose 3% after the company unveiled AI-driven growth plans and a cloud partnership with Meta.
• Bank OZK (OZK): The regional lender dropped 3% after reporting $1.59 a share in profit, missing the $1.66 estimate. The decline extended Thursday’s sector-wide slide, driven by concerns over credit.
• Novo Nordisk (NVO) and Eli Lilly (LLY): Obesity-drug makers slipped 3% and 2% after President Trump said prices for GLP-1 drugs would be “much lower,” though CMS chief Mehmet Oz said no negotiations have begun.

Watchlist: AMD, AAPL, CSX, ORCL, NVO, LLY, NVDA, IBKR, AXP, ORCL

Key Economic Events Today:

EST time

12:15 am: USD FOMC Member Musalem Speaks


Earnings

BMO (Before Market Open): American Express ($AXP), SLB ($SLB), Ally Financial ($ALLY), Regions Finl ($RF), Huntington Bancshares ($HBAN), and Truist Finl ($TFC).


The TEFS Analyst team wishes you a successful day!