Dow drops 300 points, S&P 500, Nasdaq slide as regional bank woes hit markets

The major averages retreated on Thursday as a couple of regional banks warned of loan losses, sparking concerns over credit quality.

The tech-heavy Nasdaq Composite (^IXIC) slid 0.5%, while the S&P 500 (^GSPC) fell more than 0.6%. The Dow Jones Industrial Average (^DJI) dropped about 0.6%, or 300 points.

The major averages flipped into red territory as worries within the Financials (XLF) sector dragged on the rest of the market.

The 10-year Treasury yield (^TNX) dropped below 4%, signaling rising concerns of an economic downturn. Gold (GC=F), meanwhile, climbed above $4,300 per ounce.

Yahoo Finance’s Francisco Velasquez reports:

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Financials led the declines on Thursday as concerns over credit quality at a pair of regional banks spooked investors.

Regional bank stocks fell after Zions Bancorporation (ZION) disclosed that it would take a $50 million loss in the third quarter on two separate commercial and industrial loans.

Western Alliance (WAL) shares also plunged after the regional lender said a borrower failed “to provide collateral loans in first position.”

Meanwhile, Jefferies (JEF) stock also moved lower, extending the recent fallout from its involvement in the collapse of First Brands.

Bitcoin (BTC-USD) has had a rocky first half of October so far.

The world’s largest cryptocurrency surged to start the month as investors sought a hedge against US government shutdown uncertainty. Last Friday, it plunged from $121,000 as low as $104,000 following President Trump’s threat of 100% tariffs on Chinese goods.

Bitcoin’s descent was particularly notable against the backdrop of gold (GC=F), which has climbed to new all-time highs past $4,200 and is up 16% in the past month. Bitcoin, by comparison, has yet to recover from Friday’s losses and is down 8% in that period.

“Right now, capital is clearly favoring gold due to its momentum and reduced volatility profile,” Sean Farrell, head of digital asset strategy at Fundstrat, told Yahoo Finance. “There are also structural buyers in central banks, which provides a quasi-backstop to the trade.”

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Yahoo Finance’s Claire Boston reports:

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Stocks of regional banks were hit Thursday amid growing concern in the private-credit space, which came to the forefront this week after a warning from JPMorgan (JPM) CEO Jamie Dimon.

Also moving these stocks was a disclosure from Zions Bancorporation (ZION) that it would take a $50 million loss in the third quarter on two separate commercial and industrial loans.

Reuters reports:

Shares of Zions were hit particularly hard. Also plunging were shares of Jefferies (JEF), which has been caught up in the First Brands collapse.

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United Airlines (UAL) shares fell more than 5% in midday trading on Thursday despite reporting third quarter financial results ahead of expectations the previous day.

Yahoo Finance’s Pras Subramanian wrote of the results:

Read more about United’s results here.

OpenAI (OPAI.PVT) would have to spend more than $1 trillion within the next five years to deliver the massive amount of computing power it has promised to deploy through partnerships with chipmakers Nvidia (NVDA), Broadcom (AVGO), and Advanced Micro Devices (AMD), according to Citi (C) analysts.

OpenAI’s latest deals with the three companies include an ambitious promise to deliver 26 gigawatts worth of computing capacity using their chips, which is nearly the amount of power required to provide electricity to the entire state of New York during peak summer demand.

Citi estimates that it takes $50 billion in spending on computing hardware, energy infrastructure, and data center construction to bring one gigawatt of compute capacity online.

Using that assumption, Citi analyst Chris Danely said in a note to clients this week that OpenAI’s capital expenditures would hit $1.3 trillion by 2030.

Read my full story for Yahoo Finance here.

American Battery Technology Company (ABAT) shares sank 28% Thursday after disclosing in a filing to the US Securities and Exchange Commission that the US Department of Energy has canceled $52 million in grant funding.

ABAT had been awarded the grant in 2023 to support its $115 million project to build a commercial manufacturing facility for the production of battery-grade lithium hydroxide, which the company said would advance domestic critical mineral lithium production and support US energy independence.

ABAT said in the filing that it has appealed the termination, but added, “Regardless of the outcome of the appeal process, the Company intends to move forward with the project without impact to timeline or scope.”

Yahoo Finance’s Jennifer Schonberger reports:

Read the full story here.

There’s a growing fear on Wall Street of an AI hype-fueled market bubble. The argument is that valuations are stretched as tech stocks become intertwined through a tangled web of circular investments linking them more closely to the success of OpenAI (OPAI.PVT), which has yet to turn a profit.

OpenAI has promised to deliver billions in revenue to cloud providers, chipmakers, and data center companies as it works to bring online more than 26 gigawatts of computing power in the next several years — enough power to provide electricity to more than 20 million homes — that would help train and run its next-generation AI models.

And those promises have helped fuel broader optimism about future demand for AI chips and cloud services.

But Wall Street analysts Vivek Arya of Bank of America and Gil Luria of DA Davidson told Yahoo Finance in interviews that fears of a bubble could be overdone because at least some parts of the market aren’t fully pricing in OpenAI’s success in achieving its goals. In other words, if OpenAI doesn’t do everything it says it will, stocks may not crash as badly as some analysts fear.

DA Davidson’s Luria pointed to Oracle (ORCL) stock as an example. Oracle shares surged as much as 43% and traded as high as $345 when the cloud company revealed a backlog of massive AI contracts during its latest earnings report. However, the stock dropped to as low as $292 in the two days following a Wall Street Journal report that revealed OpenAI was responsible for the vast majority of that backlog.

“So that tells you the market has put about a 50% discount on OpenAI living up [its]obligations to Oracle,” Luria said. “And I think [that is] a rule of thumb that tells you what the perspective is, which is, it’s possible that OpenAI can spend all this money, but there’s a pretty good chance they won’t spend all this money.”

US stocks rose on Thursday as the world’s leading AI chip manufacturer TSMC (TSM) posted earnings results ahead of expectations that lifted AI market optimism.

The tech-heavy Nasdaq Composite (^IXIC) moved up nearly 0.5%, while the S&P 500 (^GSPC) put on roughly 0.3%. The Dow Jones Industrial Average (^DJI), which includes fewer tech stocks, added 0.25%.

Nvidia (NVDA), Broadcom (AVGO), and other chip stocks rose as TSMC’s (TSM) earnings and executive commentary bolstered confidence in AI-linked semiconductor demand.

Shares of leading AI chipmaker Nvidia rose 1%, while rival Broadcom added 1.4%. Shares of Micron (MU), whose memory chips are used alongside Nvidia’s GPUs in AI servers, climbed 3.4%, while British chip designer Arm (ARM) gained nearly 1%. AMD (AMD) shares were flat.

The moves come as TSMC’s third quarter earnings report surpassed expectations and the Taiwan-based contract chip manufacturer lifted its full-year 2025 revenue growth outlook to the mid-30% range from its earlier 30% forecast.

TSMC also lifted the bottom of its capital expenditure forecast range to $40 billion from $38 billion — with 70% of that budget allocated to ramping up its advanced manufacturing processes related to AI chipmaking — as the company noted “higher growth opportunities in the following years.”

TSMC chair C.C. Wei said: “Our conviction in the AI megatrend is strengthening and we believe the demand for semiconductor[s] will continue to be very fundamental.”

CFO Jen-Chau Huang added that “next year looks to be a healthy year, and we are confident on the mega trend that we’ll continue to invest.”

That conviction is a positive signal for the AI space, as CEOs and Wall Street analysts increasingly express concerns over a market bubble fueled by AI hype and a tangled web of circular investments among the leading industry players.

Please note: Some economic data will not be available due to the government shutdown.

Economic data: Initial jobless claims (week ending Oct. 11); Continuing claims (week ending Oct. 4); Retail sales advance (September); Producer price index final demand (September); Philadelphia Fed business outlook; Business inventories (August); NAHB housing market index (October)

Earnings calendar: Taiwan Semiconductor Manufacturing Company (TSM), Charles Schwab (SCHW), BNY Mellon (BK), U.S. Bancorp (USB), Interactive Brokers (IBKR), Marsh & McLennan (MMC), Infosys (INFY), CSX (CSX)

Here are some of the biggest stories you may have missed overnight and early this morning:

Trump on US-China trade war: ‘You’re in one now’

OpenAI has 2 kinds of dealmaking — and they’re lopsided

Xi’s rare earth shock gives Trump a chance to woo back US allies

TSMC hikes outlook in vote for sustained AI boom

Salesforce jumps as $60B forecast eases revenue growth concerns

Gold climbs to record on US-China tensions and Fed rate-cut bets

Oil rises as Trump says India will stop buying from Russia

Nestlé stock soars on sales rebound, plan for 16,000 job cuts

Here’s a look at some of the top stocks trending in premarket trading:

Nvidia (NVDA) stock rose 1% in premarket trading on Thursday after an upbeat earnings release from fellow chipmaker TSMC (TSM) helped boost chip stocks.

HPE (HPE) stock fell 8% before the bell after 2026 guidance came in below expectations amid slow growth for the company’s networking business.

J.B. Hunt Transport Services, Inc. (JBHT) stock rose 13% in premarket trading on Thursday following the release of its third-quarter earnings. The transport and logistics company beat Wall Street estimates.