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JPMorgan rises on plans to buy most of First Republic
assets
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Energy stocks slide as oil prices drop
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Fed expected to raise rates later this week
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Indexes: Dow up 0.26%, S&P climbs 0.19%, Nasdaq off 0.02%
(Adds comment, updates prices)
By Ankika Biswas and Sruthi Shankar
May 1 (Reuters) - The S&P 500 and the Dow edged higher
on Monday as JPMorgan rose after the bank said it will buy most
of First Republic Bank's assets, while caution prevailed ahead
of the Federal Reserve's policy decision later this week.
JPMorgan Chase & Co's shares rose 3.1% to a near
two-month high after the deal was announced earlier in the day.
The S&P 500 Banks index gained 1.1%, while the KBW
Regional Banking index shed 1.5%.
Shares of regional banks PNC Financial and Citizens
Financial , that were among the bidders for First
Republic, dropped 4.7% and 5.2%, respectively.
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.
"The positive reaction in (JPM) stock is in part a positive
reaction to the stabilization in the sector, as much as any kind
of advantage gained from the purchase," said Rick Meckler,
partner at Cherry Lane Investments.
"But regional banks will face higher cost of doing business
for some time until confidence is rebuilt or there is a
different regulatory scheme."
Weighing on the market, energy stocks fell 1.3% as
crude prices dropped nearly 2%, hurt by weak
economic data from China and expectations of another U.S.
interest rate hike.
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 a 90% chance
of such a move, according to CME Group's FedWatch tool.
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.
At 12:15 a.m. ET, the Dow Jones Industrial Average was up 87.32 points, or 0.26%, at 34,185.48, the S&P 500 was up 7.79 points, or 0.19%, at 4,177.27, and the Nasdaq
Composite was down 2.45 points, or 0.02%, at 12,224.14.
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, raising
the risk of a recession this year.
Norwegian Cruise Line Holdings rose 8.1% after
raising its full-year profit forecast, betting on higher pricing
and pent-up demand from wealthy customers.
General Motors Co gained 2.4% following reports that
Morgan Stanley upgraded the company's shares. The automaker also
laid off several hundred full-time contract workers over the
weekend including at its engineering hub in suburban Detroit.
Declining issues outnumbered advancers for a 1.05-to-1 ratio
on the NYSE. Advancing issues outnumbered decliners for a
1.03-to-1 ratio on the Nasdaq.
The S&P index recorded 32 new 52-week highs and one new low,
while the Nasdaq recorded 69 new highs and 107 new lows.
(Reporting by Ankika Biswas and Sruthi Shankar in Bengaluru;
Editing by Saumyadeb Chakrabarty and Shounak Dasgupta)
