(Updates with afternoon trading)

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Salesforce ( CRM ) rises after strong revenue forecast

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Weak Travelers results hit insurance stocks

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US-China trade tensions remain front and center

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S&P 500 -0.98%, Nasdaq -0.92%, Dow -0.85%

By Noel Randewich

Oct 16 (Reuters) -

Wall Street fell on Thursday, with signs of weakness in

regional banks spooking investors already on edge over

China-U.S. trade tensions.

Regional bank Zions Bancorporation dropped 13%

after

disclosing

an unexpected loss on two loans in its California division,

adding to growing investor unease about hidden credit stress as

lenders navigate economic uncertainty with interest rates still

relatively high.

Also increasing worries about regional banks, Western

Alliance said it initiated a fraud lawsuit against one

of its borrowers. Its stock slumped 11%.

With the S&P 500 recently at record highs, investors were

also watching for developments between Washington and Beijing

after their trade war escalated last week.

U.S. President Donald Trump has threatened 100% tariffs on

China starting November 1, as well as other new trade measures

against the world's second largest economy following Chinese

curbs on exports of rare earth minerals.

"With the added uncertainty of U.S. and China trade and

increased rhetoric and what that could mean for the economy and

for the markets, I think that's adding to market instability,"

said Tom Hainlin, an investment strategist at U.S. Bank Wealth

Management in Minneapolis.

TSMC, the world's largest manufacturer of

advanced semiconductors, gave a

bullish outlook

for spending on artificial intelligence.

Nvidia ( NVDA ), a top TSMC customer, was up 0.2%, but

other heavyweight tech-related stocks lost ground, with Apple ( AAPL )

, Tesla and Meta Platforms ( META ) each down

more than 1%.

Salesforce ( CRM ) jumped about 4% after the business

software seller forecast revenue of more than $60 billion for

2030, above Wall Street estimates.

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

cuts have lifted Wall Street to record highs this year. The S&P

500 has gained 13% so far in 2025, and it is valued at an

elevated 23 times expected earnings, a five-year high, according

to LSEG.

Robust earnings from major U.S. banks this week offered

fresh signs of economic resilience at a time when official

macroeconomic reports remain delayed due to an ongoing

government shutdown.

Analysts on average see S&P 500 aggregate earnings up 9.2%

in the third quarter, versus expectations of an 8.8% increase

two weeks ago, according to LSEG I/B/E/S.

The S&P 500 insurance index dropped 3.9% after

industry bellwether Travelers Companies ( TRV )

posted

quarterly revenue below estimates, with its stock losing

2.8%. Insurer Marsh & McLennan ( MMC )

reported

quarterly results and fell 8%.

The S&P 500 fell 0.98%, trading at 6,606.00 points. The

Nasdaq declined 0.92% to 22,461.58 points, while the Dow Jones

Industrial Average was down 0.85% at 45,859.71 points.

All 11 S&P 500 sector indexes declined, led lower by

financials, down 2.7%, followed by a 1.65% loss in

energy.

Data showed the Philadelphia Fed Business Index for October

declined 12.8 points, compared with a rise of 8.5 estimated by

the economists polled by Reuters.

Fed Governor Christopher Waller said he supported an additional

interest rate cut in October due to mixed readings on the state

of the job market.

Hewlett Packard Enterprise ( HPE ) slumped almost 10% after the

technology company forecast annual profit and revenue below Wall

Street expectations.

J.B. Hunt shares jumped 20% after the trucking firm

reported third-quarter profits.

Declining stocks outnumbered rising ones within the S&P 500

by a 3.7-to-one ratio.

The S&P 500 posted 29 new highs and 14 new lows; the Nasdaq

recorded 109 new highs and 84 new lows.