Wall Street Breakfast: What Moved Markets
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Stocks closed out March with all three major market indexes higher than they were at the end of February, as the turmoil caused by the collapse of Silicon Valley Bank was contained, at least for now. The banking turbulence may well weigh on lending conditions in the months ahead, creating a new headwind for the U.S. economy, but the prospect of further Federal Reserve rate increases appears to have diminished. Friday's Commerce Department data that showed the Fed's favored inflation gauge coming in slightly lower than expected in February reinforced those hopes. For the month, the Dow Jones average added 1.9%, the S&P 500 gained 3.5%, and the Nasdaq Composite climbed 6.7%. For the week, the Dow Jones jumped 3.2%, the Nasdaq rose 3.4%, and the S&P popped 3.5%. Read Seeking Alpha's Catalyst Watch for a preview of next week's major market events.
The banking crisis saw some signs of containment this week as First Citizens Bank (FCNCA) agreed to buy Silicon Valley Bank's (OTC:SIVBQ) deposits and loans. The purchase of $72B in assets came with a 23% discount of $16.5B, while approximately $90B in securities and other assets will remain in receivership for disposition by the FDIC (see more details here). UBS (UBS) also brought back Sergio Ermotti to figure out how to integrate Credit Suisse (CS) into its operations after conducting an emergency rescue of the troubled lender, while there were calls for more transparency over in the U.S. In hindsight, "bank management clearly failed, supervisors failed and our regulatory system failed" concerning Silicon Valley Bank, Fed Vice Chair Michael Barr said before the House Financial Services panel. (65 comments)
"Come on, baby, let's start anew," Alibaba (BABA) sang in a new hit-single released on Tuesday, with most believing it won't be hard to pull off for the company. Investors were certainly "down dooby doo down down" for the move, sending shares of the Chinese tech giant soaring 14% during the session. Alibaba plans to split into six different units covering e-commerce, media and the cloud, with the goal of boosting each group's individual business value and would have the potential to seek their own IPOs. The reorganization follows years-long headwinds for Alibaba shares, including a slowing economy in China and geopolitical tensions, as well as a broad tech selloff and sweeping crackdown on Chinese internet companies. (135 comments)
The Nasdaq 100 Index (NDX) on Wednesday surged into a new bull market for the first time in nearly three years, with the tech-heavy benchmark up more than 20% from its closing low on Dec. 28. The latest leg was powered by earnings from Micron Technology (MU), which stressed confidence in industry fundamentals, as well as broader rallies for megacaps Amazon (AMZN), Apple (AAPL) and Microsoft (MSFT). It's an interesting turn for the market, with worries over interest rates and a looming recession, but perhaps that is what is getting cash off the sidelines. Rates will soon peak - as telegraphed by the Fed's dot plot - or easing may even ensue, while a lower growth environment can see a premium return to the old beloved tech names. (45 comments)
Apple (AAPL) officially released its "Buy Now, Pay Later" service in the U.S., permitting purchase payments over time with no fees and no interest. Select users can apply for Apple Pay Later loans of $50 to $1,000, which can be managed in Apple Wallet and used for both online and in-app merchants that accept Apple Pay. The solution was initially planned to be released in September 2022 as part of iOS 16, before technical challenges delayed the launch, though Apple now hopes to offer it to all eligible users in the months ahead. Mastercard (MA) and Goldman Sachs (GS) will be helping out Apple with payment credentials, while rival BNPL provider Affirm (AFRM) tumbled on the latest news. Is a bank charter for Apple in the cards? (49 comments)
Finland is one step closer to becoming a NATO member after Turkey's parliament approved a bill to expand the military alliance. It was the last vote the country needed to join the 30-nation group after Hungary's legislature gave its approval earlier this week. "Soon both Finland and Sweden will be members, meaning that President Putin is getting the exact opposite of what he wanted," NATO Secretary General Jens Stoltenberg declared. "He wanted less NATO. He is getting more NATO." Stocks like Lockheed Martin (LMT) and Northrop Grumman (NOC) have risen about 20% since Russia's invasion of Ukraine in February 2022, but many other defense players haven't held on to their gains. Wells Fargo explores how cuts in federal spending could hit defense stocks (42 comments)
U.S. Indices
Dow +3.2% to 33,274. S&P 500 +3.5% to 4,109. Nasdaq +3.4% to 12,222. Russell 2000 +3.9% to 1,802. CBOE Volatility Index -14.% to 18.7.
S&P 500 Sectors
Consumer Staples +2.5%. Utilities +3.1%. Financials +3.7%. Telecom +1.5%. Healthcare +1.8%. Industrials +4.4%. Information Technology +3.4%. Materials +4.9%. Energy +6.2%. Consumer Discretionary +5.6%. Real Estate +5.2%.
World Indices
London +3.1% to 7,632. France +4.4% to 7,322. Germany +4.5% to 15,629. Japan +2.4% to 28,041. China +0.2% to 3,273. Hong Kong +2.4% to 20,400. India +2.6% to 58,992.
Commodities and Bonds
Crude Oil WTI +9.3% to $75.7/bbl. Gold -0.8% to $1,986.7/oz. Natural Gas -8.3% to 2.166. Ten-Year Bond Yield -0.2 bps to 3.372.
Forex and Cryptos
EUR/USD +0.77%. USD/JPY +1.58%. GBP/USD +0.86%. Bitcoin +3.6%. Litecoin -2.2%. Ethereum +4.7%. XRP +20.5%.
Top S&P 500 Gainers
Caesars Entertainment (CZR) +15%. McCormick & Company (MKC) +14%. First Republic Bank (FRC) +13%. V.F. Corporation (VFC) +13%. Paycom Software (PAYC) +12%.
Top S&P 500 Losers
Match Group (MTCH) -5%. Humana (HUM) -3%. Generac Holdings (GNRC) -3%. Citizens Financial Group (CFG) -2%. Alphabet (GOOG) -2%.
Where will the markets be headed next week? Current trends and ideas? Add your thoughts to the comments section.
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