US stocks experienced a decline on Thursday, with ongoing US-China trade tensions and growing concerns about loan losses at regional banks contributing to the market’s woes. The tech-focused Nasdaq Composite, which initially showed solid gains, ultimately settled with a 0.5% loss. Concurrently, the S&P 500 and Dow Jones Industrial Average also faced drops of 0.6%.
Despite this negative trend, AI-related stocks received a boost after chip manufacturing giant TSMC reported impressive earnings, which led to a rise in shares of Nvidia and other technology firms. TSMC’s upgraded outlook for revenue growth in 2025, spurred by surging demand in the AI sector, instilled some optimism in the markets. The chipmaker achieved a nearly 40% increase in quarterly profit, surpassing estimates and marking a significant milestone.
In response to market uncertainties, investors shifted their focus to bonds, causing the yield on 10-year Treasury notes to dip below 4%. Simultaneously, gold prices climbed to record highs, surpassing $4,300 per ounce, as investors sought safe-haven assets.
Regional banks drew attention on Thursday as Zions Bancorporation and Western Alliance disclosed challenges related to loan performance, heightening worries about credit quality in the sector. This revelation overshadowed the positive earnings performances of major Wall Street banks reported earlier in the week.
The ongoing trade dynamic between the US and China remains a critical point of discussion, especially after former President Trump acknowledged the heightened tensions, declaring, “Well, you’re in one now,” in reference to the ongoing trade conflict. There are indications that Treasury Secretary Scott Bessent may seek to extend the existing trade truce, which adds a layer of complexity to the situation.
Adding to the uncertain atmosphere, the US government remains shut down, now entering its third week. This ongoing halt has deprived both the Federal Reserve and Wall Street of crucial economic data, with mounting expectations that the shutdown may extend into November.
While the day’s trading reflected a struggle amid various headwinds, the resilience of AI-related sectors and actions taken by governments could provide a glimmer of hope for investors looking ahead.