U.S. Stocks Slide as Credit Woes Grow; Bitcoin Falls Despite Gold Surge

U.S. stocks declined on Thursday as rising credit concerns and a slowing economy rattled investors. JPMorgan CEO Jamie Dimon warned that the recent financial troubles could be just the beginning, likening the situation to seeing “one cockroach” and expecting more to follow. His remarks came after the bankruptcies of auto parts supplier First Brands and subprime auto lender Tricolor Holdings earlier this fall.

The fallout has hit Jefferies (JEF) hard — the bank that backed First Brands — with shares plunging 25% over the past month, including a 9% drop Thursday. Jefferies maintains it can withstand potential losses. Meanwhile, Blue Owl Capital’s co-CEO Mark Lipschultz responded to Dimon’s comments by suggesting that banks should examine their own portfolios for hidden risks.

Regional banks are also under pressure. Zions Bancorp (ZION) reported a $50 million loan charge tied to borrowers facing legal issues, while Western Alliance (WAL) revealed a lawsuit against a commercial real estate borrower for alleged fraud. Shares of ZION and WAL tumbled 12% and 10%, respectively, dragging down the regional banking sector.

Despite these setbacks, the broader S&P 500 slipped only 0.8%. However, “risk-off” sentiment sent gold prices soaring 2.5% to a record near $4,300 per ounce. Bitcoin (BTC), often dubbed digital gold, failed to mirror this strength, falling 3.2% to around $108,000, down 11% over the past week as investors continued treating it as a “risk-on” asset.

Still, some analysts see potential for a turnaround. Historical market crashes — including the 2020 COVID plunge and 2023 bank failures — led to massive bitcoin rallies following aggressive fiscal and monetary easing. Bond markets appear to be anticipating similar action, with Treasury yields dropping sharply and futures now pricing in rising odds of Federal Reserve rate cuts later this year.