After a brief rally, markets are now mixed with the Dow fighting to stay green. Meanwhile, the S&P 500 and the NASDAQ are red. Fear is gaining momentum again, with the VIX now up to 24.45 from about 20 over the last few days – which we can blame on the trade war, the government shutdown, and the latest banking issues.
Even with the trade war, the government shutdown, and banking concerns, markets are in the green. The Dow is up another 200 points. The NASDAQ is up 16, with the S&P 500 up about 10 points on the day.
Helping, analysts at Baird just said to buy the dip in Zions Bancorp – one of the stocks that came under pressure yesterday, giving it an outperform rating with a $65 price target.
“The ~$1B+ decline in ZION’s market cap likely reflects fears surrounding contagion risk and liquidity concerns. While we understand the sell-off to some degree, the magnitude is overdone from our perspective,” they said, as quoted by CNBC.
“To be clear, a $50M fraud loss is a clear negative, and we would expect the stock to be weak on it, but a $1B cap reduction seems more than excessive to us, and we feel like the panic selling provides a great opportunity to buy ZION shares here,” they added.
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With the trade war, the government shutdown and now regional banks disclosing issues with bad and fraudulent loans, markets are still attempting to shrug it all off.
At the moment, Dow futures are up about 60 points. Meanwhile, the S&P 500 is down about three points, with the NASDAQ down 80. The Vanguard S&P 500 ETF (NYSEMKT: VOO) is also down just slightly in premarket trade.
Regarding the trade war, U.S. Treasury Secretary Scott Bessent will speak with Chinese Vice Premier He Lifeng to discuss the ongoing trade negotiations between the United States and China, as noted by CNBC.
Last checked, President Trump threatened China with a cooking oil trade ban, which followed China’s buying fewer U.S. soybeans. China has since reached an agreement to purchase soybeans from Argentina — a country that is receiving a $40 billion bailout package from the United States.
Trump has also threatened an additional 100% tariff on any goods coming from China following Beijing’s rare earth controls.
Plus, “Capital Economics’ chief China economist, Zichun Huang, is also concerned that the Trump administration could tighten cross-border investment rules and possibly even move to delist China-based companies from U.S. stock markets,” as noted by Barron’s.
From here, it’ll be interesting to see what happens at the planned summit between Trump and Chinese President XI Jinping at the Asia-Pacific Economic Cooperation forum in South Korea this month … or if it’ll happen at this point.
The Senate again failed to advance a Republican bill to extend government funding and end the shutdown for a 10th time on Thursday, which marked the 16th day of the impasse. The vote was 51 to 45, falling short of the 60 votes needed to move forward.
A House-approved bill to fund the U.S. military also failed to pass the Senate. It required at least 60 votes in the 100-member Senate to advance. The final vote was 50 to 44, with three Democrats joining Republicans in the vote.
As noted by USA Today: “Over the last five decades, every president except George W. Bush and Joe Biden has weathered at least a few-day shutdown. During their tenures, Bill Clinton, Jimmy Carter and Barack Obama all experienced shutdowns lasting more than two weeks. House Speaker Mike Johnson of Louisiana warned that ‘We’re barreling toward one of the longest shutdowns in American history unless Democrats drop their partisan demands.’”
Several financial groups are wrestling with bad loans. Over the last few weeks, investors have focused on Jefferies Financial Group, which has about $45 million worth of exposure to First Brands, an auto-parts supplier that just filed for bankruptcy.
Now, two regional banks, Western Alliance Bancorp and Zions Bancorp, are slipping on loan concerns, too. In fact, both sank on news that they both lent money to companies they now claim defrauded them.
ZION anticipates losing $60 million from the fallout. WAL hasn’t disclosed how much it could lose, but it did initiate a lawsuit against the borrower, alleging fraud.
Still, despite all of the negativity, markets are attempting to shrug it all off. The VOO is holding steady, up more than 13% year to date despite trading sideways over the past month. As earnings season gains momentum, the ETF should benefit if companies meet analysts’ expectations.
Contact [email protected] for any questions or corrections.
Ian Cooper is a veteran market analyst and investment strategist with more than 20 years of experience covering stocks, commodities, and macro trends. Since 1999, he has helped investors identify market opportunities using a blend of technical analysis, fundamental research, and market sentiment.
He is the creator of the ADD News Flow Strategy, which focuses on trading market reactions to major news events and investor psychology. Cooper was also among the analysts who warned about the 2008 financial crisis and major financial institution collapses ahead of the broader market.
Before joining 247 Wall St., Cooper wrote extensively for InvestorPlace and other financial publications, covering market trends, trading strategies, and investment opportunities.
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