Minutes before the opening bell, U.S. stock futures are pointing to a slightly negative start. Overnight, markets in Asia had a mostly positive session, and the major European indexes are trading just above the breakeven mark. Elsewhere, oil prices have inched higher, with West Texas Intermediate up .2%, to around $73 a barrel.
Concerns over the state of the banking sector appear to have eased further, after First Citizens BancShares (FCNCA) agreed to purchase the deposits and loans of the former Silicon Valley Bank. Altogether, FCNCA will acquire about $72 billion of the busted bank’s loans at a discount of $16.5 billion (approximately 23% to book value), roughly doubling the assets of the North Carolina-based lender. The move was well received by investors, sending FCNCA stock up more than 50% on the session. This rising tide helped lift the shares of a number of beaten down U.S. regional banks, such as First Republic (FRC) and KeyCorp (KEY).
Under the assumption that the financial sector doesn’t serve up any more surprises (which can’t be guaranteed) traders are likely to resume their focus on the Federal Reserve and its ongoing battle to rein-in inflation. A report due early this morning from the Federal Housing Finance Agency (FHFA) will provide one data point. Specifically, its House Price Index for January is widely expected to show a flat year-over-year reading, versus the 6.6% increase posted in December. Meanwhile, tomorrow brings us National Association of Realtors’ numbers for pending U.S. home sales for February, where the consensus is calling for a 3% decline, compared to the 8.1% increase logged in January.
However, the more eagerly awaited report is the Commerce Department’s Personal Consumption Expenditures (PCE) price index for February, which is due on Friday. Investors are hoping that last month’s reading comes in below the 5.4% year-on-year uptick recorded in January. A favorable report would provide further evidence that the central bank’s efforts are working, thereby placing the Fed one step closer to ending its rate hikes.
In summary, the Dow Jones Industrials climbed 194 points on Monday, or 0.6%, the S&P 500 eked out a six point gain (0.2%), while the tech-heavy NASDAQ went against the grain, shedding 55 points, or 0.5%. – Mario Ferro
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
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