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DJI, S&P 500 modestly green, Nasdaq slips
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Financials lead S&P 500 sector gainers; comm svs weakest
group
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Euro STOXX 600 index up ~1%
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Dollar ~flat; bitcoin, gold decline; crude up ~2%
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U.S. 10-Year Treasury yield jumps to ~3.48%
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THE BEAR WON'T END UNTIL INVESTORS AND STOCKS BREAK UP (1100 EDT/1500 GMT) Over the past three weeks the economy and the banking system have become more frayed, yet Philip Palumbo, founder, CEO and chief investment officer at Palumbo Wealth Management, says markets have remained pretty resilient, but investors may still get their hearts broken. Palumbo is reiterating his call for a recession, and he believes that the alternate economic view remains based almost exclusively on strong employment trends, which are not yet wavering, despite increased news of layoffs. "It is hard to dispute that recessions are hard to come by when employment is strong, so for any recession forecast to be correct, it requires some weakening in the employment data," Palumbo says.
"The banking crisis could be the event that triggers it." In his view, what matters here is how this bank run saga will impact lending practices. It only makes sense for banks to respond to the bank runs by tightening lending standards and therefore lending less than they otherwise might have. That alone is more than enough to put a serious crimp into economic activity. Coupled with office property market weakness, Palumbo says it's "getting increasingly difficult to see how the banking sector muddles through this period without some significant pain. All that means is lending standards are likely to get even tighter and that is a major headwind for the economy." However, he says the stock market appears unwilling to see this reality. It continues to look for a reason to believe that this economy will deftly skirt these obstacles and continue to grow, which to Palumbo, appears to be a perfect setup for a fall. Palumbo's bottom line is that "The bear cycle is not over; there are still far too many optimists out there. The stock market has stolen their heart, but they love it anyway. This bear ends when there is no more love."
(Terence Gabriel)
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WALL STREET BOUNCES AS BANKS RISE ON SVB DEAL (1015 EDT/1415 GMT) Wall Street is rallying early on Monday after First Citizens BancShares Inc said it would acquire the deposits and loans of failed Silicon Valley Bank, a deal that eased some worries about the banking crisis. Under the deal, unit First–Citizens Bank & Trust Company will assume SVB assets of $110 billion, deposits of $56 billion and loans of $72 billion.
Financials are leading in the early going, up 1.22%, with real estate one of two decliners among the 11 S&P 500 sectors, down 0.25%.
Small caps and transports are gaining, while value is outpacing gains in growth .
JPMorgan Chase & Co , Bank of America Corp and Wells Fargo & Co are among the top contributers to
the surge, rising 1.57%, 3.56% and 3.37%, respectively.
The KBW Bank index is up 2.60%, while in Europe the
STXE 600 banks index is gaining 1.55%.
All eyes now will be on the Federal Reserve's weekly H.8
data on the assets and liabilities of commercial banks, which
will be released after the bell on Friday.
Here is a snapshot of where markets stood a little more than
30 minutes into the trading day:
(Herbert Lash)
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CHIP STOCKS AMONG 2023'S GOLDEN BOYS (0900 EDT/1300 GMT) Chip stocks have shined brightly this year.
The Philadelphia SE Semiconductor index is up a little more than 23% so far this year versus a 17.5% rise for the broader technology sector , a 13% rise for the Nasdaq Composite , and a 3.4% gain for the benchmark S&P 500 index . Last week, the SOX thrust to its highest level in nearly a year. This, after the index used the former neckline of an inverse head & shoulders bottom as support:
After losing nearly half its value from its January 2022 high to its October trough, the SOX this January completed an inverse head & shoulders, which is a bullish reversal pattern, with a neckline breakout. Frequently, once price exceeds the neckline traders will look for a retracement back toward this line, where it will then act as support. Upon a successful test of the support, the developing advance will resume. The March 23 high at 3,216.322 is now resistance, while the broken neckline is support around 2,815. The inverse head & shoulders minimum pattern projection still calls for an eventual return to levels in excess of 3,800. Such a rally would put the SOX within striking distance of its intraday peak of 4,068 set Jan. 4, 2022. Coming back under the former neckline can suggest risk the pattern is failing.
Meanwhile, 27 of the 30 SOX members are higher year-to-date. But, of note, nine of the top 10 gainers are chipmakers as compared to equipment makers:
That said, since early March, the chipmaker/equipment maker ratio has been caught in a range. A range breakdown may signal a more sustained shift back in favor of equipment makers.
(Terence Gabriel)
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FOR MONDAY'S LIVE MARKETS POSTS PRIOR TO 0900 EDT/1300 GMT - CLICK HERE
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(Terence Gabriel is a Reuters market analyst. The views
expressed are his own)
