US stocks experienced a turbulent trading session on Thursday, reversing early gains as mounting concerns over a protracted US-China trade war and rising loan losses at regional banks unsettled investors. The tech-heavy Nasdaq Composite (^IXIC) shifted from solid opening gains to a 1% decline, despite positive movements in AI-related stocks such as Nvidia (NVDA), following a strong earnings report from chip manufacturing giant TSMC (TSM). The S&P 500 (^GSPC) and the Dow Jones Industrial Average (^DJI) also faced declines, falling 1% and 0.9% respectively, with the latter dropping nearly 400 points.
The market had shown promise early in the day as TSMC raised its revenue growth outlook for 2025 for the second time this year, citing robust demand for chips driven by AI applications. The company reported a nearly 40% surge in quarterly profit, exceeding estimates and setting a new record. This report buoyed tech stocks, with Nvidia, Broadcom (AVGO), and Micron (MU) among those that benefitted from TSMC’s optimistic outlook.
However, despite strong quarterly earnings from major banks and speculation about potential cuts to Federal Reserve interest rates, market volatility persisted throughout the week. Regional banks became a focal point of concern, particularly following adverse disclosures from Zions Bancorporation (ZION) and Western Alliance (WAL). Zions announced that it would incur a $50 million loss related to two commercial loans, while Western Alliance reported that a borrower failed to provide necessary collateral. These revelations heightened fears regarding broader credit quality in the banking sector.
Adding to the day’s turmoil, US-China trade tensions were reignited as former President Donald Trump confirmed existing frictions, stating, “You’re in one now,” in response to questions regarding the duration of the trade conflict. His comments came alongside Treasury Secretary Scott Bessent’s suggestion that a trade truce might be extended, further complicating investor sentiment.
The US government’s ongoing shutdown, now in its third week, also clouded the economic landscape as it deprived both Wall Street and the Federal Reserve of critical economic data. There are indications that the shutdown could extend into November, exacerbating uncertainty in the markets.
In the financial sector, regional bank stocks plummeted further amid rising fears of credit stress, especially after airborne commentary from JPMorgan (JPM) CEO Jamie Dimon regarding potential instability in private credit. Jefferies (JEF) also saw its stock decline, continuing the fallout from its involvement in the collapse of First Brands.
In cryptocurrency markets, Bitcoin (BTC-USD) experienced volatility, previously climbing as investors sought refuge amid government shutdown uncertainty, only to plummet from $121,000 to as low as $104,000 after Trump’s tariff threats against Chinese goods. This decline contrasted sharply with gold (GC=F), which soared to all-time highs above $4,200, reinforcing its position as a favored safe-haven asset.
Oracle (ORCL) announced a bullish projection for its cloud infrastructure revenue, expecting it to reach $166 billion by fiscal year 2030, leading to a 5% increase in its share price following the announcement. Meanwhile, mortgage rates continued to hover in a narrow range despite slight declines.
Other significant market movements included a notable drop in United Airlines (UAL) stock, which fell over 5% despite having reported third-quarter earnings above expectations. Additionally, shares of American Battery Technology Company (ABAT) plummeted 28% after the US Department of Energy canceled $52 million in grant funding aimed at supporting their lithium production project.
As trading continued, market sentiment remained jittery with heightened awareness of the precarious balance between strong corporate earnings in some sectors and overarching economic and geopolitical challenges.
