US stocks continued to slide before the bell on Friday as fears spread about regional banks’ exposure to bad loans and US credit quality, spurring an exodus by investors to safe havens.
Dow Jones Industrial Average futures (YM=F) fell roughly 0.7%, while those on the S&P 500 (ES=F) sank 0.6%. Contracts on the tech-heavy Nasdaq 100 (NQ=F) pared steeper losses, down 0.5%.
Stocks are set for a second day of losses after two US regional lenders disclosed problems with loans, allegedly linked to fraud. Those troubles deepened Wall Street jitters sparked by JPMorgan (JPM) CEO Jamie Dimon’s “cockroach” warning, seen as further signs of cracks in the creditworthiness of US borrowers.
Shares of Western Alliance Bancorp. (WAL) and Zions Bancorp. (ZION) plunged nearly 10% and 13% respectively on Thursday after their disclosures. Eyes are now on earnings reports from other regional banks due Friday, Truist Financial Corp., (TFC), Huntington Bancshares (HBAN), and Fifth Third Bancorp (FITB) among them.
The rush to safety picked up pace early on Friday, with investors flocking to less-risky assets such as bonds and gold (GC=F). The 10-year Treasury yield (^TNX) fell further below the key 4% level, while gold rose to a fresh record above $4,300 an ounce.
The stock selloff caps a turbulent week for markets, plagued by rising US-China trade tensions and the prospect of a prolonged US federal shutdown.
In trade, China is imposing fresh export controls and sanctions amid escalating threats from President Trump to impose new tariffs. But a small bright spot emerged Thursday: The White House is preparing to ease tariffs on the auto industry as soon as Friday.
Meanwhile, the government shutdown is dragging on, with some lawmakers now worried the stoppage could extend into November and even past Thanksgiving. Federal workers’ paychecks remain suspended as Trump threatens to block back pay and the courts consider his effort to fire thousands.
Amid the headwinds, earnings season is in full swing following strong results from big banks. Along with the increased focus on regionals, the parade of results continues with American Express (AXP) reporting.
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