"The Dow Jones Industrial Average dropped 301 points, or 0.7%, and the Nasdaq composite lost 0.5%. Zions Bancorp. tumbled 13.1% after the bank said its profit for the third quarter will take a hit because of a $50 million charge-off related to loans made to a pair of borrowers. Zions said it found "apparent misrepresentations and contractual defaults" by the borrowers and several people who guaranteed the loans, along with "other irregularities.""
"Another bank, Western Alliance Bancorp, dropped 10.8% after saying it has sued a borrower, alleging fraud. It also said it's standing by its financial forecasts given for 2025. Scrutiny is rising on the quality of loans that banks and other lenders have broadly made following last month's Chapter 11 bankruptcy protection filing of First Brands Group, a supplier of aftermarket auto parts. The question is whether the hiccups are just a collection of one-offs or a signal of something larger threatening the industry."
U.S. stocks declined as concerns about loan quality at midsized banks spurred selling pressure. The S&P 500 fell 0.6%, the Dow lost 301 points, and the Nasdaq slipped 0.5%. Zions Bancorp. and Western Alliance Bancorp plunged after disclosures of a $50 million charge-off and a fraud lawsuit, respectively. Markets are assessing whether recent borrower bankruptcies and loan irregularities represent isolated incidents or broader credit deterioration. Stocks have been volatile following tariff threats on China, and mixed signals from the tech sector surfaced after Taiwan Semiconductor reported stronger-than-expected profit and continued demand for advanced chips.
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