U.S. Stocks Drop on Renewed Worries About Banks

US stocks fell late in the week, weighed down by losses in midsized banks as concerns mounted over the quality of their loans, Stan Choe, Matt Ott and Teresa Cerojano reported for the Associated Press (AP).

The developments add to growing scrutiny of bank lending practices following the Chapter 11 bankruptcy filing of major auto supplier, First Brands Group. (Photo: Autolite Spark Plugs Facebook)

The S&P 500 slipped 0.6%, the Dow Jones Industrial Average dropped 301 points (0.7%), and the Nasdaq composite fell 0.5%.

Zions Bancorp. tumbled 13.1% after revealing a $50 million charge-off tied to loans to two borrowers allegedly involved in “misrepresentations and contractual defaults.”

Western Alliance Bancorp fell 10.8% after suing a borrower for alleged fraud, though it reaffirmed its 2025 financial forecasts.

The developments add to growing scrutiny of bank lending practices following the Chapter 11 bankruptcy filing of First Brands Group, a major auto parts supplier.

Analysts are debating whether these are isolated incidents or signs of deeper stress in the banking sector.

Thursday’s volatile session saw the Dow swing from a 169-point morning gain to a 472-point afternoon loss, continuing a week of market turbulence after President Trump renewed tariff threats against China, disrupting a months-long period of relative market calm.