Regional bank stocks plunged amid fears of loan defaults due to high rates and economic slowdown, despite no confirmed defaults.

Regional bank stocks, including Western Alliance and Zions Bancorp, fell sharply on October 16, 2025, amid rising concerns over credit quality and potential loan defaults. Investors reacted to broader economic uncertainty, including high interest rates and slowing growth, fueling caution ahead of earnings reports. Western Alliance’s disclosure of a lawsuit over collateral and its credit facility with Cantor Group V added to worries about balance sheet health. The sell-off, driven by macroeconomic fears rather than confirmed distress, reflects ongoing market sensitivity to credit risk in smaller banks with concentrated loan portfolios.