As the start of today’s session approaches, U.S. stock futures are suggesting a modest decline at the open. In overnight trading, markets in Asia were mostly up. Meanwhile, the major European indexes are in the red. Elsewhere, oil prices are edging lower, with West Texas Intermediate (WTI) down about 0.4%, to around $75.40 a barrel.
Earnings season remains in full swing and, so far, most companies have topped analysts’ muted expectations. Among the bigger names reporting this week are Apple (AAPL), Ford (F), and Starbucks (SBUX).
The banking sector returned to the spotlight on Monday, after regulators seized First Republic Bank(FRC), and JPMorgan Chase (JPM) agreed to take over most of its operations. The regional bank had seen its shares plummet about 90% in the wake of Silicon Valley Bank and Signature Bank failing in March. The final blow came after FRB announced last week that it lost $100 billion in deposits in the first quarter. This marked the second-largest bank failure in U.S. history, after the collapse of Washington Mutual in 2008.
The question now on traders’ minds is whether this latest shock to the banking system will prompt the Federal Reserve to temporarily pause its efforts to slow the economy through monetary tightening. The central bank wraps up its two-day meeting tomorrow. Going into the week, expectations were that the Fed’s overnight lending rate would go up another quarter percentage point, to a range of 5.00%-5.25%, marking a 16-year high.
On the economic news front, this morning brings reports on U.S. job openings and factory orders for March. Tomorrow, in addition to the Fed’s latest rate decision, we get the Institute for Supply Management’s services index for April, while Friday includes the U.S. employment report for last month.
By the numbers, stocks closed out Monday’s quiet session with modest losses. The Dow Jones Industrials were down 46 points (0.1%), while the S&P 500 slipped by one point, or a fraction of a percent, and the tech-heavy NASDAQ edged 13 points lower (0.1%). – 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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