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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

(Updates with end of trading session)

By Noel Randewich

Oct 16 (Reuters) - Wall Street closed lower on Thursday,

with signs of weakness in regional banks spooking investors

already on edge over U.S.-China trade tensions.

Shares of Zions Bancorporation tumbled after the

regional bank disclosed 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 fueling worries about regional banks, Western Alliance

slumped after it said it initiated a fraud lawsuit

against one of its borrowers.

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.

Still, heavyweight AI-related stocks Palantir ( PLTR ),

Tesla and Meta Platforms ( META ) lost ground.

Salesforce ( CRM ) jumped 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 12% 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 after industry

bellwether Travelers Companies ( TRV ) posted quarterly revenue

below estimates, with its stock falling sharply.

Insurer Marsh & McLennan ( MMC ) reported flat operating

margins and slowing growth in its risk and insurance

business, and its stock also fell.

According to preliminary data, the S&P 500

lost 42.10 points, or 0.63%, to end at 6,628.96 points,

while the Nasdaq Composite lost 105.77 points, or 0.47%,

to 22,564.31. The Dow Jones Industrial Average

fell 298.48 points, or 0.65%, to 45,954.83.

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 after the

technology company forecast annual profit and revenue below Wall

Street expectations.

J.B. Hunt shares jumped after the trucking firm

reported third-quarter profits.