US benchmark indices on Wall Street ended lower on Thursday, adding to an already volatile week as a bad loan crisis at some regional banks brought back fears of March 2023.
The Dow Jones ended the session 300 points down, while the S&P 500 and the Nasdaq declined by 0.6% and 0.5% respectively.
Shares of Zions Bancorp and Western Alliance Bancorp fell up to 13% on Thursday. The former fell after it declared a $50 million charge during the quarter for a loan underwritten by its subsidiary, while Western Alliance tanked after initiating a fraud lawsuit against one of its borrowers.
Concerns over the quality of credit in the US has increased after two companies, auto parts supplier First Brands, and car dealership Tricolor recently filed for bankruptcy. JPMorgan, which had exposure to First Brands, reported elevated credit costs in its results, prompting CEO Jamie Dimon to warn on the lender’s earnings call, “When you see one cockroach, there are probably more.”
The news brought back fears of the Silicon Valley Bank collapse in March 2023, although the market had recovered from the news after the initial fears of a contagion.
As a result, all banking stocks, from JPMorgan to Goldman Sachs fell on Thursday, thereby pressuring the Dow Jones. An ETF linked to regional banks fell 6%, while analysts say that the issue may be lender specific and not big yet to be called an industry-wide phenomenon.
Beyond the markets, US President Donald Trump said that he will meet Russian President Vladimir Putin in “two weeks or so” in Hungarian capital Budapest, and that he is hopeful of a ceasefire between Russia and Ukraine as well. The news, confirmed by Russia’s foreign policy aide, sent oil prices tumbling to a fresh five-month low.
The US Dollar index slipped further, now below levels of 98.5 after a recent dash towards 100, while the 10-year yield fell below the 4% mark. The shorter-tenor two-year yield fell to the lowest since 2022, while Gold and Silver prices continued to make new highs.