Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., October 16, 2025.
Jeenah Moon | Reuters
U.S. stock futures fell on Friday as concerns surrounding regional banks’ loan practices pushed investors away from riskier assets and toward safe havens.
Futures tied to the Dow Jones Industrial Average dropped 360 points, or 0.8%. S&P 500 futures and Nasdaq 100 futures were down by 1.1% and 1.3%, respectively.
Each of the major U.S. stock indexes closed in the red on Thursday, fueled by a significant decline in bank stocks late in the session.
Shares of several financial heavyweights and regional banking names fell after Zions and Western Alliance disclosed bad loans, which sparked worries about loose lending practices and fears that similar issues could arise. The SPDR S&P Regional Banking ETF (KRE), which has been down for four straight weeks, lost more than 6% during the session. Uneasiness in the banking sector has grown after the recent bankruptcies of two auto industry-related companies.
Regional banks added to their declines on Friday, with Zions and Western Alliance losing around 1% and Banc of California shedding 3.6%. The KRE ETF also slid 1%.
Thursday also saw a jump in the Cboe Volatility Index, commonly referred to as Wall Street’s fear gauge, alongside moves lower in Treasury yields and the U.S. dollar. Gold prices rose to fresh records, on the other hand, suggesting continued interest in the safe-haven asset amid widespread uncertainty. On Friday, the Vix added to its run, climbing above 27 and reaching its highest level since April.
Liz Ann Sonders, chief investment strategist at Charles Schwab, said on CNBC’s “Closing Bell” Thursday that the banking concerns come as there’s is a lot of “speculative froth” that has developed in the public market, with investors chasing stocks with riskier profiles like quantum computing, drones and unprofitable tech stocks.
“When you have that speculative froth and then you have sort of a bigger picture potential issue, those two can sometimes collide and cause an increase in volatility,” she said, noting that most of the so-called froth is not in the megacap names anymore, but rather in smaller pockets of the market such as the Russell 2000 index, which hit a fresh high this week.
Meanwhile, tensions about global trade and tariff policies, elevated market valuations amid the artificial intelligence boom and the effects of the ongoing U.S. government stoppage have also carried on unabated. The shutdown, which is in its third week, has resulted in an indefinite halt of crucial economic data releases from federal agencies.
Stocks remain on track for weekly gains despite Thursday’s decline. The S&P 500 is up nearly 1.2% after a strong start to the third-quarter earnings. The Dow has added about 1% week to date, while the Nasdaq has gained 1.6%.