US stocks continued to sell off before the bell on Friday as fears spread about regional banks’ exposure to bad loans and US credit quality, spurring an exodus by investors to safe havens.
Dow Jones Industrial Average futures (YM=F) fell roughly 0.8%, while those on the S&P 500 (ES=F) tumbled 1.1%. Contracts on the tech-heavy Nasdaq 100 (NQ=F) led the retreat, down 1.3%.
Stocks are set for a second day of losses after two US regional lenders disclosed problems with loans, allegedly linked to fraud. Those troubles deepened Wall Street jitters sparked by JPMorgan (JPM) CEO Jamie Dimon’s “cockroach” warning, seen as further signs of cracks in the creditworthiness of US borrowers.
A rush to safety picked up pace on Friday, with investors flocking to less-risky assets such as bonds and gold (GC=F). The 10-year Treasury yield (^TNX) fell further below the key 4% level, while gold rose to a fresh record above $4,300 an ounce.
The building stock selloff caps a turbulent week for markets, plagued by rising US-China trade tensions and the prospect of a prolonged US federal shutdown.
China imposing fresh export controls and sanctions amid escalating threats from President Trump to impose new tariffs. A small bright spot on trade, however, emerged Thursday night when Bloomberg reported the White House is preparing to ease tariffs on the auto industry and could announce the plan as soon as Friday.
At the same time, traders are ramping up bets the Federal Reserve will make a “jumbo” 50 basis point interest-rate cut by the end of the year, in light of comments by policymakers such as Trump-backed Governor Stephen Miran. Chair Jerome Powell hinted this week that the stage is set for a quarter-point rate cut at the Fed’s October meeting.
Amid the headwinds, earnings season is in full swing following strong results from big banks. On Friday, the parade of results continues with American Express (AXP) reporting before the bell.
Meanwhile, the government shutdown is dragging on with no end in sight. On Thursday, the Senate failed for the 10th time to advance a Republican plan to fund the government. Some lawmakers are now worried the stoppage could extend into November and even past Thanksgiving.
The release of official economic data remains on hold during the stoppage, with this week’s scheduled release of the Consumer Price Index (CPI) report now set for publication next week. Federal workers’ paychecks remain suspended as Trump threatens to block back pay, and the courts consider his effort to fire thousands.
LIVE 1 update
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Trump says price of Ozempic will soon be ‘much lower’. Novo, Lilly shares fall.
Shares in Novo Nordisk (NVO, NOVO-B.CO) and Eli Lilly (LLY) slid after President Trump said on Thursday that the price of Ozempic would soon fall to just $150 a month.
Novo, which makes the best-selling weight-loss drug, saw its stock fall over 4% in US premarket and over 6% in Copenhagen. The Danish pharma’s shares have lost almost 60% in the past 12 months amid questions about whether it can maintain its prominence in the weightloss market.
At the same time, shares of Lilly retreated over 4% before the bell.
Bloomberg reports:
