Stocks Drop on Worries About Banks

US stocks slumped Thursday after another turbulent day of trading.

• The S&P 500 fell 41.99 points, or 0.6%, to 6,629.07 after erasing a morning gain.
• The Dow Jones Industrial Average dropped 301.07 points, or 0.7%, to 45,952.24.
• The Nasdaq composite fell 107.54 points, or 0.5%, to 22,562.54.

Bank stocks led the way on worries about loans they've made. Zions Bancorp tumbled 13.1% after warning that 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, the AP reports.

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 merely a collection of one-offs or a signal of something larger threatening the industry.

Thursday's swoon erased an early morning gain driven by an encouraging signal about the artificial-intelligence boom. Taiwan Semiconductor Manufacturing Co. reported a bigger jump in profit for the latest quarter than analysts expected. Chief Financial Officer Wendell Huang also said TSMC expects "continued strong demand for our leading-edge process technologies" going into the end of the year. That's important for the US stock market because TSMC is a critical player at the center of the AI frenzy, making chips for such companies as Nvidia.

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Travelers dropped 2.9% Thursday even though the insurer reported a stronger profit for the latest quarter than analysts expected. Its revenue fell short of forecasts. Hewlett Packard Enterprise fell 10.1% after giving long-term financial targets that some analysts found underwhelming. They helped overshadow a 4% gain for Salesforce, which unveiled a plan to deliver more than 10% in compounded annual revenue growth in coming years. JB Hunt Transport Services trucked 22.1% higher after the freight company breezed past Wall Street's profit targets in the third quarter.