U.S. stocks were mixed on Monday, while bank stocks also moved upward after North Carolina-based First Citizens (FCNCA) bank agreed to buy most of Silicon Valley Bank.
Checking in with the indexes around noon. The S&P 500 (^GSPC) edged up 0.1% and the Dow Jones Industrial Average (^DJI) gained 0.5%. The Nasdaq Composite (^IXIC) down by 0.6%.
Bond yields got a bounce. The yield on the benchmark 10-year U.S. Treasury note rose to 3.5% Monday morning. WTI crude oil was up $70 a barrel.
Stocks ended a volatile week with gains on Friday, in a week that saw the Federal Reserve raise rates by 0.25%, while pressures in the U.S. and European banking sectors remained in focus for investors. Shares of Deutsche Bank (DB) came under heat Friday after the costs of insuring the bank against a credit default spiked overnight. The major stock market indexes all tallied a winning week in the end, with the Dow Jones average gaining 1.2%, the S&P 500 rising 1.4%, and the Nasdaq Composite closing up 1.7%.
Banks will dominate the headlines again this week with the earnings and economic calendars in light. The Senate Banking Committee will hold a hearing on bank failures on Tuesday, with the witness list including FDIC Chairman Martin Gruenberg, Federal Reserve Vice Chairman Michael Barr, and Treasury Undersecretary Nellie Liang.
“Looking forward, the banking sector will clearly set the scene this week as we approach the month-end on Thursday. The data will be a bit secondary as it'll be too early to judge any impact from the mini crisis so far,” Jim Reid and colleagues at Deutsche Bank wrote in a note to clients.
Bank sentiment gained momentum Monday morning. Regional bank stocks trading higher Monday morning include First Republic Bank (FRC), PacWest Bancorp (PACW), Western Alliance Bancorporation (WAL) , Zions Bancorporation (ZION), and Regions Financial (RF).
Wall Street heavyweights led by JPMorgan (JPM) have been trying for more than a week to raise capital for First Republic, which included a $30 billion cash lifeline amid the failures of regional lenders Silicon Valley Bank and Signature Bank.
Meanwhile, First Citizens Bank entered into an agreement to buy all of Silicon Valley Bank’s loans and deposits, according to a Federal Deposit Insurance Corporation (FDIC) announcement. The North Carolina-based lender’s assets will nearly double following the acquisition. The 17 branches once belonging to Silicon Valley Bank will now open as First Citizens Bank branches beginning Monday. Shares of First Citizens Bank (FCNCA) rose more than 46% Monday morning.