This week brought a mix of political stalemate, global diplomacy, and market unease as Washington remained mired in a prolonged government shutdown, President Donald Trump took a victory lap over a Middle East cease-fire, and renewed credit worries rattled US regional banks.
Meanwhile, Wall Street’s largest lenders continued to post robust quarterly results, tempering investor anxiety amid broader economic uncertainty.
Senate gridlock extends government shutdown
The US Senate once again failed to advance a Republican-led proposal to extend government funding on Thursday, marking the tenth unsuccessful attempt since the shutdown began more than two weeks ago.
The latest vote, 51–45, fell short of the 60 votes needed to proceed, ensuring that the government shutdown will continue through at least October 20.
No Democratic senators crossed party lines, reflecting entrenched divisions between the parties.
The House-passed measure, championed by Senate Majority Leader John Thune (R-S.D.), would have temporarily funded the government through November 21.
Democrats, however, argued it failed to address key policy demands, including the extension of healthcare tax credits.
In a further setback, the Senate also blocked a defense appropriations bill intended to reopen parts of the government.
The Pentagon funding measure fell 50–44, with only three Democrats backing it.
Thune, who voted against it procedurally to revive it later, expressed visible frustration as hopes of a partial funding breakthrough faded.
With the Senate now adjourned until Monday, the shutdown—already the longest since 2018–2019—continues to weigh on markets and public services.
Trump hails Gaza cease-fire as hostage exchanges continue
In a major diplomatic development, President Donald Trump addressed Israel’s Parliament on Monday, hailing the release of the final 20 hostages held by Hamas under a US-brokered cease-fire agreement.
The deal also saw Israel release nearly 2,000 Palestinian prisoners in exchange, marking what Trump called “the historic dawn of a new Middle East.”
The truce, while offering relief after two years of conflict, remains fragile.
Hamas has yet to comply with Israel’s demand to disarm, and international discussions on Gaza’s future continue.
On Saturday, Israel confirmed the return of the remains of a tenth hostage, Eliyahu Margalit, 75, while tensions rose over Hamas’s failure to return all bodies as stipulated in the cease-fire.
Aid agencies described Gaza as a “wasteland,” warning of enormous humanitarian challenges in the aftermath of Israel’s campaign.
Regional banks rattle markets with loan losses and fraud claims
The US regional banking sector faced fresh pressure after Zions Bancorp disclosed a $50 million charge-off tied to two troubled commercial loans at its California Bank & Trust unit.
Western Alliance Bancorp also revealed a lawsuit against borrower Cantor Group V, LLC, over alleged fraud and misrepresentation.
Shares of both banks plunged, weighing on market sentiment throughout the week.
Analysts cited renewed credit-quality fears amid growing defaults in niche sectors such as auto parts and commercial real estate.
Though Western Alliance reaffirmed its 2025 guidance, the developments highlighted investor unease over opaque lending practices and potential contagion within smaller banks.
Big Banks deliver strong earnings but urge caution
In contrast, major US banks delivered strong third-quarter earnings.
JPMorgan Chase, Goldman Sachs, Wells Fargo, and Morgan Stanley all beat expectations, supported by robust dealmaking and trading revenue.
JPMorgan CEO Jamie Dimon highlighted the resilience of the US economy but cautioned that “complex geopolitical conditions” and “sticky inflation” posed risks ahead.
Goldman Sachs reported a 39% jump in profits, even as it announced plans for over 1,000 layoffs by year-end.
Wells Fargo and Morgan Stanley also posted double-digit profit gains, citing solid consumer health and rising investment activity.
Still, executives across Wall Street emphasized vigilance as the combination of political gridlock, global tensions, and regional bank stress continued to cloud the economic outlook.
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