(New York) The New York Stock Exchange was trading close to balance on Monday after JPMorgan took over troubled regional bank First Republic as the week looks busy with a Fed monetary decision.
The Dow Jones index gained 0.18% while the NASDAQ lost 0.05%. The broader S&P 500 index climbed 0.12% around 10:15 a.m. (Eastern time).
Investors seemed soothed by the rescue of the day, that of the Californian bank First Republic, in great difficulty for weeks with a massive flight of its deposits.
At the end of an operation carried out over the weekend by the regulators, the bank was seized by the authorities and its assets taken over by the largest bank in the country JPMorgan while the FDIC, one of the regulators, will assume a part losses.
The operation “will help stabilize the system,” assured the boss of JPMorgan, Jamie Dimon.
The title of JPM climbed 2.60% to 141.80 dollars.
“I think it’s a good operation that will calm investors’ concerns about the banking sector,” commented Jack Ablin, chief investor for Cresset, for AFP.
“Government gets stability and JPMorgan gets affluent clientele and deposits back,” the expert continued, adding, “Generally, this kind of government-backed deal is good for the buyer.”
First Republic, which saw its deposits melt by $100 billion during the first quarter, was in danger of simply going through losses and profits like the establishments SVB and Signature last March.
The First Republic action, which was no longer to be listed in the future, was suspended on Monday.
As for indicators, manufacturing activity in April, measured by the ISM, showed a small increase to 47.1 against 46.7 even if activity remains in contraction.
The component of prices paid, on the other hand, shows that these have continued to rise, which is mixed news for the Fed and investors who are watching inflation.
The Fed on the menu
Investors are indeed focused on the monetary meeting of the US central bank which should lead to a further hike in overnight rates of 25 basis points on Wednesday.
This should push up these rates, which dictate the level of all other credits, to a 15-year high of between 5% and 5.25%.
After this final hike, markets are hoping the Fed will hint that it will now take a break to assess how inflation is doing. All eyes will be on Jerome Powell’s press conference on Wednesday.
For its part, the European Central Bank (ECB), which meets on Thursday, should also raise its rates, with the majority of economists expecting a limited increase of 0.25 points.
Bond yields climbed to 3.51% versus 3.42% for 10-year bonds and 4.15% versus 4.00% for two-year ones. The dollar gained 0.20% against the euro.
On the macroeconomic front, in addition to the ISM activity indices, the employment figures published on Friday for the month of April should confirm that the American economy is marking time.
The results season also continues to unfold with those of the giant Apple, expected on Thursday, but also Fort and Pfizer laboratories on Tuesday.
Norwegian Cruse soared 4.72% after doubling its quarterly revenue compared to last year. These results exceeded forecasts also propelled the action of other cruise lines. Royal Caribbean and Carnival took 2%.