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JPMorgan rises on plans to buy most of First Republic
assets
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Fed expected to raise rates later this week
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Indexes: Dow up 0.12%, S&P up 0.04%, Nasdaq down 0.14%
(Updates prices to open; adds details, comments)
By Ankika Biswas and Sruthi Shankar
May 1 (Reuters) - The S&P 500 and the Dow edged higher
as JPMorgan shares rose after the lender said it will buy most
of First Republic Bank's assets, while investors refrained from
making big bets ahead of the Federal Reserve's policy decision
this week.
JPMorgan Chase & Co's shares rose 2.8% on Monday to
nearly a two-month high after the deal was announced earlier in
the day. The S&P 500 Banks index gained 1.4%.
Shares of regional banks PNC Financial and Citizens
Financial dropped 4.5% and 6.1%, respectively. Big banks
such as Bank of America and Wells Fargo & Co rose 0.3% and 2.8%, respectively.
The KBW Regional Banking index fell 0.6%.
The rescue comes less than two months after a deposit flight
from U.S. lenders Silicon Valley Bank and Signature Bank forced
the Fed to step in with emergency measures to stabilize markets.
"When you have the largest bank and probably the most
successful bank purchasing First Republic Bank's assets, it
shows some confidence in the system and willingness on the part
of the government to allow very large players to help stabilize
the situation," said Rick Meckler, partner at Cherry Lane
Investments.
First Republic's woes kicked off last week on a bleak note,
but upbeat earnings from Alphabet Inc , Microsoft Corp and Meta Platforms Inc helped the benchmark
S&P 500 notch its second consecutive month of gain on
Friday.
Analysts now expect first-quarter earnings for S&P 500
companies to fall 1.9% from a year earlier, compared with a 5.1%
fall expected at the start of April, according to Refinitiv
data. Apple Inc is set to report later this week.
Investors are keenly awaiting the conclusion of the Fed's
two-day policy meeting on Wednesday for signs that its
aggressive monetary policy tightening is coming to an end soon.
Recent economic data reinforced bets of another 25-basis
point interest rate hike, with investors pricing in 90% chances
of such a move, according to CME Group's FedWatch tool.
Investors will also focus on Jerome Powell's press
conference to assess if the Fed's commentary pushes back market
expectations of rate cuts before the year-end amid the recent
banking turmoil and threats of an imminent recession.
At 10:08 a.m. ET, the Dow Jones Industrial Average was up 40.97 points, or 0.12%, at 34,139.13, the S&P 500 was up 1.68 points, or 0.04%, at 4,171.16, and the Nasdaq
Composite was down 16.65 points, or 0.14%, at 12,209.94.
Data on Monday showed U.S. manufacturing pulled off a
three-year low in April as new orders improved slightly and
employment rebounded, but activity remained depressed amid
higher borrowing costs and tight credit, raising the risk of a
recession this year.
Another set of data showed U.S. construction spending
increased more than expected in March.
Norwegian Cruise Line Holdings rose 4.8% after
raising its full-year profit forecast, betting on higher pricing
and pent-up demand from wealthy customers.
General Motors Co gained 3.2% following reports that
Morgan Stanley upgraded the stock to "overweight".
Advancing issues outnumbered decliners for a 1.32-to-1 ratio
on the NYSE and a 1.27-to-1 ratio on the Nasdaq.
The S&P index recorded 21 new 52-week highs and no new low,
while the Nasdaq recorded 48 new highs and 47 new lows.
(Reporting by Ankika Biswas and Sruthi Shankar in Bengaluru,
Additional reporting by Manya Saini; Editing by Saumyadeb
Chakrabarty and Shounak Dasgupta)
