4:09pm: Dow, S&P 500 outpace Nasdaq
The Dow closed Monday up 195 points, 0.6%, at 32,433, while the Nasdaq Composite fell 55 points, 0.5%, to 11,767 and the S&P 500 improved 7 points, 0.2%, to 3,978. The small-cap Russell 2000 index added 21 points, 1.2%, to 1,756.
Regional bank stocks soared after First Citizens BancShares has agreed to buy most of Silicon Valley Bank (SVB), helping the S&P 500 notch its third-straight winning session.
Food stocks also did well. Of the six S&P 500 stocks that hit 52-week highs Monday, three of them are involved with food: Darden Restaurants shares hit their highest point since January 2022, and The Hershey Company stock reached an all-time high , as did Mondelez International.
12.05pm: First Citizens BancShares stock pops 46% after bank agrees to buy most of SVB
US stocks were mixed in noon trading as regional banks got a boost from news that First Citizens BancShares has agreed to buy most of troubled Silicon Valley Bank (SVB).
At midday, the Dow gained 172 points to 32,409, while the S&P 500 added 4 points at 3,975 and the tech-heavy Nasdaq fell 75 points to 11,748.
“Market sentiment is improving as policymakers take steps to alleviate the recent challenges,” Invesco global market strategist Brian Levitt said.
“An extension of the liquidity facility that had been set up by the Federal Reserve meaningfully eases prior concerns that a series of bank runs could be in the offing,” he added.
Other notable movers included shares of Pinterest Inc, which rose nearly 3% after a UBS analyst wrote that the stock could offer more than 25% upside if the company is able to drive revenue growth through improved advertising.
9:40am: Stocks rise on SVB sale
US stocks moved higher at the open on Monday as fears over the banking sector’s health were abated by the news that First Citizens Bank would be acquiring Silicon Valley Bank.
Just after the market opened, the Dow Jones Industrial Average had added 0.9% or 274 points at 32,511 points, the S&P 500 was up 0.6% or 24 points at 3,995 points, and the Nasdaq Composite had added 0.2% or 25 points at 11,850 points.
Reports that lawmakers are considering expanding a lending facility to boost balance sheets sent regional bank stocks sharply higher, with First Republic Bank up 28.8%, Western Alliance Bancorporation up 7.2%, and PacWest Bancorp up 7.4% at the open.
FOREX.com market analyst Fiona Cincotta said volatility is expected to be elevated again this week as investors continue watching and weighing up developments in the banking sector.
“Fed speakers will also be under the spotlight after the Fed hiked rates by 25 bps last week, but the market is questioning the Fed’s ability to hike further amid the stresses in the financial sector,” Cincott said.
“Fed speakers will shed more light on how policymakers are balancing the banking sector crisis against high inflation and the need to hike rates.”
Looking towards the end of the week the US core PCE, the Fed’s preferred inflation gauge, will also be in focus, she pointed out.
“The gauge unexpectedly rose on a monthly basis in January, the Fed will be keen to see this resume a downward trajectory,” Cincotta said.
6:30am: US equities set for a positive start
Wall Street is expected to start the week higher as pressure on US regional banks abates, with news that failed Silicon Valley Bank (SVB) is to be acquired by North Carolina-based lender First Citizens Bank helping to improve sentiment for the markets.
Futures for the S&P 500 index rose more than 0.5% in Monday pre-market trading, while those for the Dow Jones Industrial Average (DJIA) gained just under 0.5%, and contracts for the Nasdaq-100 added 0.3%.
Regulators confirmed early Monday that First Citizens will acquire the deposits and loans of SVB just over two weeks after the bank's demise sparked a crisis of confidence in global financial markets.
Under the deal with the Federal Deposit Insurance Corporation (FDIC), First Citizens will assume assets of $110 billion, deposits of $56 billion and loans of $72 billion as per a loss-sharing agreement that will provide downside protection against possible credit losses.
After a turbulent week of trading, the S&P 500 closed up 0.6% at 3,971 points on Friday, while the DJIA added 0.4% to 32,238, and the Nasdaq Composite gained 0.3 % to 11,824.
“Futures are indicating the week will start on a marginally positive note for Wall Street, with major indices currently eyeing some gains at the opening bell,” commented James Hughes, chief market analyst at Scope Markets.
“General sentiment appears to be improving with the news that draws on regional banks are abating somewhat and also with an update on the sale process of SVB. The turmoil that gripped European banks heading into the weekend is also abating – at least for now – but it would be of little surprise if traders were to cling onto a cautious mindset for some time yet," he added.
With economic data thin on the ground over the next few days, investors will be looking to the revised estimate for US fourth-quarter GDP, due for release on Thursday, which should confirm growth of 2.7% in the final quarter of 2022, TickMill Group market analyst Patrick Munnelly noted.
“The main event outside of banking news flow this week will be the Fed’s preferred inflation gauge, the PCE (personal consumption expenditures) deflator due for release on Friday,” Munnelly said. “Once again investors will be parsing the data for signals that the recent disinflationary signs were driven by the unusual weather witnessed at the beginning of the year or will the number confirm that further work from the Fed will be required to tackle persistent inflation pressures.”
“Markets are expecting the headline PCE deflator to fall to 5.2% in February from 5.4% in January, while the core figure excluding energy and food prices is expected to show an uptick of 0.5% leaving the annualised number at 4.8%,” he added. “If confirmed this will leave officials with the conundrum of battling inflation while at the same time walking the fine line of maintaining market stability amidst the landscape of banking sector fragility.”