Dow Jones Industrial Average struggles as banks give up recent earnings gains

• The Dow Jones has found a fresh consolidation patch in the 46,200 region.
• Earnings weeks, despite opening on a strong note, has given way to additional investor concerns.
• Market headwinds are starting to pile up as traders see cracks forming everywhere.

The Dow Jones Industrial Average (DJIA) grappled in the middle of a deepening consolidation zone on Thursday, churning on both sides of 46,200 and declining around 200 points on the day. Investors are still tilting toward the bullish side on expectations that current political and structural issues will eventually be resolved, but market sentiment continues to take regular hits as fissures grow wider. The US government shutdown remains an ongoing issue that looms over investors, and traders caught a fresh bout of risk-off jitters amid rising concerns of risky loans on bank balance sheets.

Big banks up, small banks down

Investment bank earnings bolstered broad-market sentiment during the midweek, but now regional and smaller-scale lenders are dragging investor confidence lower. Regional banks including Zions (ZION) and Western Alliance (WAL) tumbled on Thursday on faulty loans and concerns of borrower fraud. An undercurrent of weakness in regional banks adds onto growing market fears of the clear-as-mud private credit industry, which saw two auto-industry lending companies collapse recently.

US-China trade tensions are still simmering in the background, and investors are awaiting some sort of resolution from the Trump administration. US President Donald Trump threatened a new wave of triple-digit tariffs on China after China played a strong hand in the ongoing tariff dispute, imposing strict export controls on rare earth minerals produced in China, which remain a critical resource for many of the US's key industries, especially tech and computing hardware.

Everything is fine

The US government shutdown continues to roll on with little sign of a fix, and official US datasets remain dark for the time being. The Federal Reserve (Fed), lacking a consistent flow of inflation-sensitive datasets, has little else to do but hold steady on its current pace of interest rate cuts. Rate markets have fully priced in two more rate cuts before the end of the calendar year, with another rate cut expected next March.

Dow Jones daily chart