markets

More bad news on loans crushes US banks

Regional banks are cratering on Thursday following more news of souring loans.

Zions Bancorp tanked after announcing that it’s taking a $50 million charge-off relating to loans of more than $60 million made to investment funds that purchased distressed commercial mortgage loans. It’s suing the borrowers, alleging that their collateral was not protected in accordance with the terms of their loans. Zions said it “believes this is an isolated situation, it plans to engage counsel to coordinate an independent review.”

Western Alliance Bancorp is also facing significant selling pressure, as it made a loan with an outstanding balance of nearly $100 million to the same investment funds, which it is also suing, alleging fraud. However, Western Alliance also reaffirmed its full-year guidance while disclosing this news.

More signs of credit stress are not what the doctor ordered for financials, which were already on edge in the wake of the high-profile busts at Tricolor and First Brands. The Financial Select Sector SPDR Fund and SPDR S&P Regional Banking ETF are poised for their biggest one-day drops since April.

Adding to the risk-off tone are indications of funding stress in interbank markets. The secured overnight financing rate (SOFR) has traded above the top end of the Federal Reserve’s target range for its policy rate amid anecdotal reports of elevated demand for short-term financing from regional banks. However, this also coincides with the timing of corporate tax payments and US Treasury settlements, which also act as drains on cash.

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J. Edward Moreno11h

Novo, Lilly fall after Trump says "the fat loss drug" will go down in price

Novo Nordisk and Eli Lilly fell in after-hours trading after President Trump told reporters on Thursday that "the fat loss drug" will go down in price.

Trump said GLP-1s like Novo's Ozempic will be less than $150 out of pocket. Dr. Mehmet Oz, the Centers for Medicare & Medicaid Services administrator, interjected to say that those deals have not yet been finalized.

The Trump administration has been negotiating with drugmakers to bring down drug prices in the US. Currently, the popular weight loss drugs made by Lilly and Novo cost between $300 and $500 a month out of pocket through the drugmakers' direct-to-consumer platforms.

J. Edward Moreno

Hims & Hers CEO sells stock after menopause expansion announcement

Hims rose more than 15% on Wednesday after the company announced it would expand its offerings, before giving back some of those gains on Thursday.

Hims & Hers Health CEO Andrew Dudum

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Matt Phillips12h

Fedspeak in line with market’s view on rate cuts

Comments from Federal Reserve Gov. Christopher Waller Thursday calling for another quarter-point rate cut is in line with views from both financial and prediction markets.

Since the Fed cut interest rates at its last meeting on September 17, positions taken by traders in both markets suggest increased certainty that the central bank will continue to ease at its two-day meeting later this month.

Market-implied odds derived from event contracts offered on Robinhood suggest traders see a 94% chance the central bank cuts its Fed Funds rate target by 0.25 percentage points when it announces its next decision on October 29, as of market close Thursday.

(Robinhood Markets Inc. is the parent company of Sherwood Media, an independently operated media company subject to certain legal and regulatory restrictions. I own stock as part of my compensation.)

Odds implied by prices in the Fed Funds futures markets are an even higher 97%. That’s up from roughly 74% a month ago.

In comments to the National Association of Business Economists earlier this week, Fed Chair Jerome Powell also hit notes supportive of rate cuts.

The Fed chief — who has been the target of a public pressure campaign from President Trump to deliver lower rates — told listeners that a sharp slowdown in hiring in the US is raising worries about economic weakness at the central bank, despite the fact that the Fed’s preferred inflation gauge is still running nearly a full percentage point above its 2% long-term target.

“Rising downside risks to employment have shifted our assessment of the balance of risks,” Powell said.

Fed’s Waller Calls for Quarter-Point Rate Cut at October Meeting

Since the Fed cut interest rates at its last meeting on September 17, positions taken by traders in both markets suggest increased certainty that the central bank will continue to ease at its two-day meeting later this month.

Market-implied odds derived from event contracts offered on Robinhood suggest traders see a 94% chance the central bank cuts its Fed Funds rate target by 0.25 percentage points when it announces its next decision on October 29, as of market close Thursday.

(Robinhood Markets Inc. is the parent company of Sherwood Media, an independently operated media company subject to certain legal and regulatory restrictions. I own stock as part of my compensation.)

Odds implied by prices in the Fed Funds futures markets are an even higher 97%. That’s up from roughly 74% a month ago.

In comments to the National Association of Business Economists earlier this week, Fed Chair Jerome Powell also hit notes supportive of rate cuts.

The Fed chief — who has been the target of a public pressure campaign from President Trump to deliver lower rates — told listeners that a sharp slowdown in hiring in the US is raising worries about economic weakness at the central bank, despite the fact that the Fed’s preferred inflation gauge is still running nearly a full percentage point above its 2% long-term target.

“Rising downside risks to employment have shifted our assessment of the balance of risks,” Powell said.

Toby Bochan, Luke Kawa

US stocks suffer as speculative stock sell-off and financials weigh on markets

The S&P 500, Nasdaq 100, and Russell 2000 all finished in the red.

Grizzly bear growling USA.

markets

Oracle jumps as it says AI cloud gross margins can reach 35%, predicts $166 billion in infrastructure revenue by 2030

Oracle shares jumped as executives said the company expects 35% gross margins on large AI infrastructure projects, while speaking at the Oracle AI World conference in Las Vegas, according to Bloomberg.

Reuters also reported that the company today said it expects to see $166 billion in cloud infrastructure revenue by FY 2030.

The stock has had a strong run and is up 87% this year, though investors were momentarily spooked earlier this month after a report of weak GPU rental margins.

Oracle Rallies After Saying AI Cloud Gross Margin Can Be 35%

Oracle Rallies After Saying AI Cloud Gross Margin Can Be 35%

Reuters also reported that the company today said it expects to see $166 billion in cloud infrastructure revenue by FY 2030.

The stock has had a strong run and is up 87% this year, though investors were momentarily spooked earlier this month after a report of weak GPU rental margins.

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