Subject: Re: Speculative fever
Not THAT big a deal yet:

US stocks closed lower Thursday as jitters spread on Wall Street about credit market turmoil and regional banks’ exposures to bad loans.

The Dow fell 301 points, or 0.65%. The broader S&P 500 dropped by 0.63%, and the tech-heavy Nasdaq Composite moved 0.47% lower.

Volatility has returned to Wall Street amid rising US-China trade tensions, concerns about historically expensive stocks and brewing trouble in the banking industry.

Regional bank shares tumbled Thursday after two lenders disclosed issues with borrowers, stoking nerves about the health of the credit market — and the potential for negative spillovers into the stock market and broader economy.

Zions Bancorp (ZION) sank 13% after the bank disclosed it would take a $50 million loss in the third quarter because of a bad loan. Western Alliance Bancorp (WAL) dropped 10.8% after it disclosed it is suing a borrower over allegations of fraud.

“Credit quality worries are plaguing Wall Street today as fears mount that there are multiple large lenders with heavy exposure to problematic loans with limited collateral,” said José Torres, senior economist at Interactive Brokers.

The disclosures come on the heels of auto lenders First Brands and Tricolor Holdings filing for bankruptcy in September. Nerves are rising that big banks are tied up in loans that might not get repaid.

Jefferies (JEF) sank 10.6% Thursday as the bank wrestles with the fallout from having exposure to First Brands. Jefferies shares had their worst day since April and are down 25% so far this month.

“Everyone is asking is that a canary in the coal mine?” Michael Block, market strategist at Third Seven Capital, told CNN’s Matt Egan. “They’re supposed to be the smartest guys in the room.”

JPMorgan Chase CEO Jamie Dimon said on his company’s earnings call on Tuesday that he is concerned about the credit environment. JPMorgan disclosed it had a $170 million exposure to Tricolor.

“These are early signs there might be some excess out there,” Dimon said on the earnings call, “If we ever have a downturn, you’re going to see quite a bit more credit issues.”

“I look at asset prices being very high, credit spreads being very low…I’d feel more comfortable if that weren’t true because that’s a long way to fall,” Dimon said on Thursday at the annual Institute for International Finance meeting.

“And it seems to me the market kind of thinks everything’s going to be fine, and you know, I’m not quite so sure of that,” Dimon said.

Jeff