The US stock market fell, continuing the volatile trend seen on Wall Street over the past week, as bad debt issues involving two regional banks raised concerns over credit quality, further highlighting the fragility of the bull market.

Earlier in the day, the S&P 500 index saw a brief rise following a positive outlook on the demand for artificial intelligence. However, the market grew increasingly worried about borrowers' creditworthiness after the two regional banks disclosed problems related to loans under fraud allegations, leading the index to turn downward.

Stock Market Gains Stalled Shares of Zions Bancorp plummeted by 13% after the bank revealed that its wholly-owned subsidiary, California Bank & Trust, had set aside $50 million for a loan charge-off. Western Alliance Bancorp's stock dropped 11% as it stated it had also lent to the same borrower.

「Currently, this seems to be limited to these two relatively large regional banks,」 said Steve Sosnick from Interactive Brokers. 「Although their size and scope are similar to that of Silicon Valley Bank, which collapsed and triggered a crisis two and a half years ago, there are no signs indicating that this is a systemic issue.」

Amid renewed turbulence in the banking sector, the sudden collapse of subprime auto lender Tricolor Holdings has impacted JPMorgan Chase in the third quarter, resulting in $170 million in charge-offs, which increased the bank's credit costs and prompted CEO Jamie Dimon to issue a warning.

The S&P 500 index fell by 0.6%, while a closely watched regional bank ETF dropped by 6.2%. Oracle's stock soared following an announcement regarding profit margin expectations for its AI infrastructure project.

Goldman Sachs reported that over $3.4 trillion in options contracts are set to expire on Friday.

Concerning Zions, Truist analyst David Smith noted, 「If these loans have turned into bad debt due to fraud rather than issues arising from normal operations, is this a good or bad thing from a credit perspective? Regardless, there have been enough 'one-off events' recently in the bank's commercial loan sector for investors to sell first and ask questions later.」

By the close of the US market, the S&P 500 index decreased by 0.63% to 6629.07 points; the Dow Jones Industrial Average fell by 0.65% to 45952.24 points; the Nasdaq Composite dropped by 0.47% to 22562.54 points.