U.S. equities begin the week on a slightly higher note, as investors digest the U..S regulator's approval of the sale of First Republic Bank FRC's assets to JPMorgan Chase & Co. JPM.
Both the S&P 500 and the Dow Jones Industrial Average are slightly stronger, while the Nasdaq remained steady due to rising Treasury yields.
The main underperformers of the day are U.S. Treasuries, with yields jumping dramatically across all maturities of the curve as investors perceive First Republic's resolution as lowering the risks of a banking meltdown.
Cues From Monday’s Trading:
Major U.S. equity indices edged higher, with both the S&P 500 and the Dow adding 0.3%, while the Nasdaq 100 was flat.
Small cap equities in the Russell 2000 were the outperformers, with the benchmark rising 0.5%.
| Index | Performance (+/-) | Value | |
|---|---|---|---|
| Nasdaq 100 | +0.05% | 13,258.17 | |
| S&P 500 Index | +0.34% | 4,183.18 | |
| Dow Industrials | +0.31% | 34,228.98 |
Analyst Color:
The last week’s rally was driven by larger companies as investors sought refuge in quality names amid the credit concerns brewing in the banking industry, which would be more of a problem for smaller businesses, said fund manager Louis Navellier. He noted that the Invesco QQQ Trust QQQ hit the high for the year on the back of positive big tech earnings.
“If the Fed doesn't say they are done for now after next Wednesday's FOMC meeting, the market indexes appear vulnerable,” Navellier said.
Monday's Trading In Major US Equity ETFs: In midday trading on Monday, the SPDR S&P 500 ETF Trust SPY was 0.3% higher to $417.32, the SPDR Dow Jones Industrial Average ETF DIA rose 0.37% to $342.39 and the Invesco QQQ Trust QQQ was 0.1% higher to $322.76, according to Benzinga Pro data.
Among sectors, the outperformers were the Utilities Select Sector SPDR Fund XLU and the Industrials Select Sector SPDR Fund XLI, both up by 0.9%.
Losses hit the Energy Select Sector SPDR Fund XLK, down 0.9%, the Consumer Discretionary Select Sector SPDR Fund XLY, down 0.6% and the Real Estate Select Sector SPDR Fund XLRE, down 0.4%.
Latest Economic Data:
- The Institute for Supply Management said the U.S. manufacturing purchasing managers’ index, or PMI, rose from 46.3 in March to 47.1 in April, beating expectations of 46.8. Among the different subindices, it's worth noting that input costs increased in April after falling somewhat the previous month.
The Commerce Department reported a 0.3% increase in construction spending in March, rising from the negative 0.3% recorded in February.
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Stocks In Focus:
- First Republic shares tumbled close to 43% after the FDIC takeover. JPMorgan, which has agreed to buy its assets and deposits from the FDIC, rose over 3%.
- Norwegian Cruise Line Holdings Ltd. NCLH was the best performer of the day among S&P 500 companies, up 8%, as the firm posted better than expected results in Q1.
- NVIDIA Corp. NVDA rose 3.7%, on the back of positive AI sentiment.
- Chinese electric vehicle trio Li Auto, Inc. LI, XPeng, Inc. XPEV and Nio, Inc. NIO climbed following the release of April delivery data.
- IVERIC bio, Inc. ISEE jumped over 17% after the retinal diseases-focused biopharma inked a deal to be acquired by Japanese pharma giant Astellas Pharma, Inc. ALPMY.
- Rambus, Inc. RMBS, NXP Semiconductors N.V. NXPI, MicroStrategy, Inc. MSTR, MGM Resorts International MGM and Lattice Semiconductor Corp. LSCC are among the notable companies reporting after the bell.
Commodities, Bonds, Other Global Equity Markets:
Crude oil fell 1.8%, with a barrel of WTI-grade crude dropping to $75.20. The United States Oil Fund ETF USO was 1.8% lower to $66.30 per share.
Treasury yields rose substantially, with the 10-year yield up by 13 basis points to 3.55% and the two-year yield also up 13 basis points to 4.13%. The iShares 20+ Year Treasury Bond ETF TLT was 2.4% lower on the day.
The dollar continued to strengthen, with the U.S. dollar index, which is tracked by the Invesco DB USD Index Bullish Fund ETF UUP, up 0.5%. The EUR/USD pair, which is tracked by the Invesco CurrecyShares Euro Currency Trust FXE, fell 0.4% to 1.097.
European equity were mostly flat. The iShares MSCI Eurozone ETF EZU tilted 0.2% higher.
Gold fell 0.35% to $1,982/oz. The SPDR Gold Trust GLD was 0.4% lower to $184.2. Silver ticked 0.4% lower to $24.93, with the iShares Silver Trust SLV falling 0.4% to $22.91 per share. Bitcoin BTC/USD fell 3.2% to $28,288.
Staff writer Piero Cingari updated this report midday Monday.
Photo via Shutterstock.
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