Markets Today: Stock Indexes Climb as Banking Concerns Ease

Morning Markets

March S&P 500 futures (ESM23) this morning are up +0.62%, and March Nasdaq 100 E-Mini futures (NQM23) are up +0.25%.

U.S. stock index futures this morning are moderately higher as the prospect of additional support from U.S. authorities eased some concerns about liquidity at regional banks 

First Republic Bank jumped more than +24% in pre-market trading to lead bank stocks higher after a Bloomberg report said U.S. authorities are considering expanding an emergency lending facility for banks in ways that would give First Republic Bank more time to shore up its balance sheet. Also, First Citizens BancShares surged more than +30% in pre-market trading after it agreed to buy all deposits and loans of SVB Financial Group’s Silicon Valley Bank after the regulatory seizure.

On Sunday, Minneapolis Fed President Kashkari said recent bank turmoil had increased the risk of a U.S. recession but that it was too soon to judge what it means for the economy and monetary policy.

Global bond yields are climbing today on easing bank concerns.  The 10-year T-note yield is up +10.7 bp at 3.483%.  Also, the 10-year German bund yield is up +12.0 bp at 2.249%, and the 10-year UK gilt yield is up +13.1 bp at 3.414%. 

Overseas stock markets are mixed.  The Euro Stoxx 50 today is up +0.89%.  China’s Shanghai Composite stock index closed down -0.44%, and Japan’s Nikkei Stock Index closed up +0.33%. 

The Euro Stoxx 50 index today is moderately higher.  Strength in European bank stocks is leading the overall market higher today as they recover slightly from last week’s sharp losses. European healthcare stocks are also climbing today, led by a +5% jump in Novartis AG after the company reported promising results of its Kisqali drug for breast cancer patients.  European stocks also garnered support from today’s economic news that showed a gauge of German business confidence unexpectedly rose to a 13-month high. 

Eurozone Feb M3 money supply rose +2.9% y/y, weaker than expectations of +3.2% y/y and the slowest pace of increase in more than eight years.

The German Mar IFO business climate index unexpectedly rose +2.1 to a 13-month high of 93.3, stronger than expectations of a decline to 91.0.

China’s Shanghai Composite today fell to a 1-week low and closed moderately lower.  Chinese stocks are under pressure on concerns that the action by the world’s central banks to keep raising interest rates to curb inflation, along with banking turmoil, may weaken the global economy and demand for Chinese exports.  Chinese technology stocks moved lower today after quarterly earnings from Meituan and Xiaomi disappointed.  Also, Chinese property stocks retreated after a major builder said China’s housing market might slump again this year.  Stocks were undercut today after economic news showed China Feb industrial profits fell by the most in 2-3/4 years as the domestic economy continues to struggle as it emerges from the pandemic.

China Feb industrial profits fell -22.9% y/y, the seventh consecutive monthly decline and the largest in 2-3/4 years.

Japan’s Nikkei Stock Index today climbed to a 2-week high and closed moderately higher.  Strength in Japanese financial stocks and railways led the overall market higher.  Also, Japanese exporters gained today as the yen weakened against the dollar, improving exporters' earnings prospects.  However, gains in the overall market were limited after Citigroup said Japanese equities face increasing pressure from deteriorating earnings estimates, as “visibility for the future remains poor,” and the consensus estimates for Japanese earnings have a “strong tendency to decline” between March and June as companies issue conservative guidance.

Today’s Japanese economic news was mixed for stocks.  On the positive side, the Jan leading index CI was revised upward by +0.1 to 96.6 from the initially reported 96.5. Conversely, Feb PPI services prices rose +1.8% y/y, stronger than expectations of +1.7% y/y.

Pre-Market U.S. Stock Movers

Bank stocks are climbing in pre-market trading, led by a rally in regional banks following a Bloomberg report said U.S. authorities are considering expanding an emergency lending facility for banks in a way that would give First Republic Bank more time to shore up its balance sheet.  First Republic Bank (FRC) is up more than +25%.  Also, PacWest Bancorp (PACW) and Western Alliance Bancorp (WAL) are up more than +5%.  JPMorgan Chase (JPM), Bank of America (BAC), Lincoln National (LNC), M&T Bank (MTB), US Bancorp (USB), Zions Bancorp (ZION), Citizens Financial Group (CFG), and Regions Financial (RF) are up more than +2% 

First Citizens Bancshares (FCNCA) surged more than +30% in pre-market trading after it agreed to buy all deposits and loans of SVB Financial Group’s Silicon Valley Bank after regulators seized it.

KeyCorp (KEY) jumped more than +7% in pre-market trading after Citigroup upgraded the stock to buy from neutral.

Corning (GLW) climbed more than +2% in pre-market trading after Deutsche Bank upgraded the stock to buy from hold, saying the company is “turning a corner.”

Roku (ROKU) rose more than +3% in pre-market trading after Susquehanna Financial upgraded the stock to positive from neutral, saying the company’s long-term drivers remain intact and the valuation reset creates an “attractive risk/reward.” 

Signify Health (SGFY) rallied more than +5% in pre-market trading after CVS Health agreed to purchase the company for about $8 billion or $30.50 per share. 

Caterpillar (CAT) slid more than -1% in pre-market trading after Baird downgraded the stock to underperform from neutral.

Frontier Communications (FYBR) dropped more than -3% in pre-market trading after Morgan Stanley downgraded the stock to underweight from equal weight.

Ollies Bargain Outlet Holdings (OLLI) fell more than -2% in pre-market trading after Citigroup downgraded the stock to sell from neutral.

Leidos Holdings (LDOS) lost more than -1% in pre-market trading after Jeffries downgraded the stock to hold from buy.

Today’s U.S. Earnings Reports (3/27/2023)

Acrivon Therapeutics Inc (ACRV), Carnival Corp (CCL), Dakota Gold Corp (DC), Excelerate Energy Inc (EE), KORE Group Holdings Inc (KORE), PVH Corp (PVH), Rigetti Computing Inc (RGTI).

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