U.S. Stocks Come Under Pressure Amid Concerns About Bad Loans

(RTTNews) - Stocks showed a strong move to the upside early in the session on Thursday but came under pressure over the course of the trading day. The major averages pulled back well off their highs of the session and into negative territory.

The major averages climbed off their worst levels going into the end of the day but remained in the red. The Dow slid 301.07 points or 0.7 percent to 45952.24, the S&P 500 declined 41.99 points or 0.6 percent to 6,629.07 and the Nasdaq fell 107.54 points or 0.5 percent to 22,562.54.

The weakness that materialized on Wall Street was attributed to the emergence of concerns about bad loans following the recent bankruptcies of two auto industry-related companies First Brands and Tricolor Holdings.

"When you see one cockroach, there are probably more," JPMorgan CEO Jamie Dimon said during the financial giant's earnings conference call earlier this week.

Regional banks Zions Bancorp (ZION) and Western Alliance (WAL) plunged amid concerns about band loans, while Jefferies (JEF), which has some exposure to First Brands, also tumbled.

Earlier in the day, the tech sector benefitted from upbeat earnings news from Taiwan Semiconductor (TSM), although the chipmaker slumped by 1.6 percent after reaching a record intraday high.

Taiwan Semiconductor, which produces chips for Nvidia (NVDA), reported a bigger than expected surge in third quarter profits amid strong AI chip demand and raised its forecast for full-year revenue growth.

On the U.S. economic front, the Federal Reserve Bank of Philadelphia released a report this morning showing a substantial pullback by its reading on regional manufacturing activity in the month of October.

The Philly Fed said its diffusion index for current general activity plunged to a negative 12.8 in October after spiking to a positive 23.2 in September, with a negative reading indicating contraction. Economists had expected the index to slump to a positive 10.0.

Sector News

Banking stocks showed a substantial move to the downside over the course of the session, dragging the KBW Bank Index down by 3.6 percent.

Significant weakness also emerged among brokerage stocks, as reflected by the 1.9 loss posted by the NYSE Arca Broker/Dealer Index.

Airline, energy and retail stocks also came under pressure as the day progressed, while gold stocks continue to turn in a strong performance as the price of precious metal surged to new record highs.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Thursday. Japan's Nikkei 225 Index jumped by 1.3 percent, while Australia's S&P/ASX 200 Index advanced by 0.9 percent.

The major European markets also moved to the upside over the course of the session. While the French CAC 40 Index surged by 1.4 percent, the German DAX Index rose by 0.4 percent and the U.K.'s FTSE 100 Index inched up by 0.1 percent.

In the bond market, treasuries moved notably higher amid the weakness that emerged on Wall Street. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, slid 7.0 basis points to 3.976 percent, closing below 4.0 percent for the first time since early April.