Dow, S&P 500, Nasdaq Fall; TSMC, Nvidia, AMD, Tesla, More Movers; Trump, China Trade Fears
A flight to safety in the wake of regional bank loan worries sent stocks tumbling and the yield on the 10-year Treasury note below 4%.
The Dow Jones Industrial Average fell 301 points, or 0.7%. The S&P 500 was down 0.6%. The Nasdaq Composite was down 0.5%.
Bonds rallied as Wall Street jumped into risk-off mode. The 10-year Treasury yield fell to 3.98%, its lowest 3 p.m. ET close since Oct. 3, 2024, according to Dow Jones Market Data. The 2-year Treasury yield was down to 3.43%, its lowest 3 p.m. ET close since Sept. 2, 2022.
The CBOE Volatility Index, or VIX, spiked this afternoon. It reached as high as 25.43, its highest intraday level since May 23, according to Dow Jones Market Data. The VIX had stayed below 20 for nearly all of August through this past Friday. As the VIX moves north of 20, it begins to signal heightened volatility.
“Between Chinese tensions on rare earths and other restrictions, along with the continuing government shutdown, the level of uncertainty remains high,” writes Andrew Brenner, head of international fixed income at NatAlliance Securities.
Regional bank stocks got hammered after Zions Bancorporation disclosed Wednesday evening a $50 million charge related to loans from two borrowers facing legal action. That bled into the broader market as the session rolled on.
The move follows a warning earlier this week from JPMorgan CEO Jamie Dimon, who commented on the Chapter 11 filing for auto parts supplier First Brands and the planned liquidation of used car dealer and lender Tricolor Holdings.
“When you see one cockroach, there are probably more,” Dimon said Tuesday. “First Brands I’d put in the same category, and there are a couple other ones out that I’ve seen that I put in similar categories.”
Odds of an October interest-rate cut hit 100% following dovish comments from Federal Reserve governor Christopher Waller, according to the CME FedWatch Tool. Traders see an 82.9% chance the federal funds rate ends the year a half-point lower than current levels. Odds of three quarter-point in cuts through December were up to 16.4% from zero on Wednesday.
