After two months of market bliss, Wall Street is stirring from its slumber.

First the collapse of First Brands Group and Tricolor Holdings revived long-dormant fears about hidden credit losses. Then, fraud-linked writedowns at Zions Bancorp and Western Alliance — erasing more than $100 billion in US bank share value in a day — stoked concern that the lending stress is more pervasive.

Until recently, investors have shrugged off everything from the government shutdown to stretched valuations, buoyed by the AI boom and resilient consumer data. That left positioning looking aggressive. According to Societe Generale , allocations to risky assets like equities and credit climbed to 67% of tracked portfolios at the end of August — near peak levels.

Stocks still ended the week with a tidy g

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