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Futures down: Dow 0.14%, S&P 500 0.36%, Nasdaq 0.58%

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Wall Street fear gauge rises to over 5-month high

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Eli Lilly ( LLY ) falls after Trump vows weight-loss drug price

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(Updates prices)

By Sukriti Gupta

Oct 17 (Reuters) - U.S. stock index futures slumped on

Friday as mounting concerns over risks and deteriorating credit

quality triggered a selloff in regional banks, further weakening

investor confidence strained by U.S.-China trade tensions and a

government shutdown.

The SPDR S&P regional banking ETF was up 1.2% in

premarket trading, after registering its steepest one-day drop

in more than six months in the previous session.

The decline was triggered by Zions Bancorporation

disclosing a $50 million loss tied to two commercial and

industrial loans, while Western Alliance said it had

initiated a lawsuit alleging fraud by Cantor Group V, LLC.

The selloff rekindled concerns over lax lending standards in

a sector already grappling with two auto bankruptcies, more than

two years after the collapse of Silicon Valley Bank.

"This is literally the latest issue that investors need to

add to a growing list of worries," City Index's senior market

analyst Fiona Cincotta said, noting concerns over U.S.-China

trade tensions, the ongoing U.S. government shutdown and

stretched equity valuations.

Zions shares fell 1.3%, while Western Alliance lost 1.5%

before the bell.

Some of the major U.S. bank stocks also dropped. JPMorgan ( JPM )

fell 0.4% and Morgan Stanley ( MS ) lost 0.7%. Bank of

America ( BAC ) and Citigroup ( C/PN ) declined 1.2% and 1.7%,

respectively.

At 07:35 a.m. ET, Dow E-minis were down 64 points,

or 0.14%, S&P 500 E-minis were down 24.25 points, or

0.36%, and Nasdaq 100 E-minis were down 143.75 points,

or 0.58%.

"It feels that these risks have come at a time when the

recent grind higher to record highs actually felt quite fragile

anyway. So, it feels like the list of risks is growing and

making investors have a bit of a reality check," Cincotta said.

Optimism around AI and expectations of U.S. interest rate

cuts have propelled Wall Street to record highs this year.

However, AI-related tech stocks, which were among the biggest

contributors to the rally, also slipped on Friday.

Wall Street's fear gauge rose to its highest in more

than five months at 26.31 points.

Investors also awaited developments between Washington and

Beijing after their trade war escalated last week.

U.S. President Donald Trump has threatened an additional

100% tariffs on China starting November 1, and other new trade

measures against the world's second-largest economy following

Chinese curbs on exports of rare earth minerals.

China's mission to the World Trade Organization blamed the

U.S. on Friday of undermining the rules-based multilateral

trading system and renewed calls for Washington to adhere to WTO

guidelines.

Among other stocks, Eli Lilly ( LLY ) fell 4.3% after Trump

said he would bring down prices of weight-loss drugs.

Micron Technology ( MU ) shares slipped 2.5% after adding

more than 7% in the previous session. Reuters reported that the

chipmaker plans to exit server chips business in China.

Robust earnings from big U.S. banks this week have set an

upbeat tone for the start of the third-quarter reporting season.

But with equity valuations already elevated, investors are

treading cautiously.