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The numbers: The U.S. created a stronger-than-expected 253,000 new jobs in April and wages rose sharply, indicating there’s still lot of demand for labor even as the economy slows.
The increase surpassed the 180,000 forecast of economists polled by The Wall Street Journal.
The unemployment rate, what’s more, fell a tick to 3.4% from 3.5%,…
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JPMorgan Chase has won the auction to take over fallen First Republic Bank, the Federal Deposit Insurance Corp. announced early Monday morning.
The deal will see America’s largest bank JPM assume all the deposits and “substantially all the assets” of First Republic FRC, which became the fourth U.S. bank to fail this year.
“Our government invited…
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JPMorgan Chase has won the auction to take over fallen First Republic Bank, the Federal Deposit Insurance Corp. announced early Monday morning.
The deal will see America’s largest bank JPM assume all the deposits and “substantially all the assets” of First Republic FRC.
The deal will see First Republic depositors — which include 11 leading…
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U.S. investors will hop right back to work on Easter Monday, after the confluence of Good Friday and “jobs day” required an abbreviated trading session for stock-index futures and Treasurys.
Because Good Friday isn’t a federal holiday, the U.S. Labor Department released the March jobs report at its usual time of 8:30 a.m. Eastern. U.S. stock exchanges and most markets were closed Friday, but U.S. stock-index futures on the CME remained open until 9:15 a.m., giving investors a 45-minute window to trade the employment data….
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U.S. stock-index futures turned higher in a holiday-shortened session after a solid March jobs report, though investors won’t fully digest the data until next week with cash trading in equities closed due to the Good Friday holiday.
Trading in stock-index futures closed at 9:15 a.m. Eastern. Stock-index futures resume trading at their regular time, 6 p.m., on Sunday, as U.S. markets return to normal trading hours Monday.
With…
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The numbers: The U.S. added a robust 236,000 new jobs in March, defying the Federal Reserve’s hopes for a big slowdown in hiring as the central bank struggles to tame inflation. The consensus economist forecast called for a nonfarm-payrolls expansion of 238,000.
The solid increase in employment last month followed a revised 326,000 gain in February and a gain of 472,000 in January.
While the increase in hiring was the smallest monthly rise in more than two years, the number of jobs created last month was much greater than is typical.
The unemployment rate, meanwhile, slipped to 3.5% from 3.6% as more people searched for and found work. That’s another sign of labor-market vigor.
There was some good news in the report for the Fed, though.
Wage growth continued to moderate closer to level the Fed would prefer. Hourly wages increased a mild 0.3% last month, the government said Friday.
The increase in pay over the past year also slowed again to a nearly two-year low of 4.2% from 4.6% in February.
What’s more, the share of people working or looking for work rose a tick to 62.6%. That’s the highest labor-force participation rate since February 2020, the last month before the pandemic’s onset.
When more people look for work, companies don’t have to compete as hard for workers via higher pay.
Emerging evidence of slack in a muscular U.S. labor market could encourage the Fed to take a breather after a rapid series of interest-rate increases.
Still, the U.S. has added a whopping 1 million–plus new jobs in the first three months of the year. The labor market is not cooling off as much as the Fed would like.
“ The Black unemployment rate fell to 5% last month, the lowest level since records began being kept in the early 1970s. ”
Stock-index futures rallied after the report, though the stock market itself is officially closed due to the Good Friday holiday.
See: Why Good Friday complicates how stock-market traders will digest March jobs report
Key details: About one-third of the new jobs created last month — 72,000 — were at service-sector companies such as bars and restaurants whose employment still has not returned to prepandemic levels.
Americans are going out to eat a lot and spending relatively more on services than on goods.
Government employment increased by 47,000. Hiring also rose at professional businesses and in healthcare. Retailers cut 15,000 jobs.
Employment fell slightly in manufacturing and construction, or goods-producing industries, which are under more pressure from rising interest rates.
The strong labor market has benefited all groups, but especially Black Americans. The Black unemployment rate fell to 5% last month, the lowest level since records began being kept in the early 1970s.
Big picture: The ongoing tightness in the labor market could inflame inflation and even push the Fed to raise interest rates more than currently forecast to try to get prices under control.
Higher borrowing costs reduce inflation by slowing the economy, but most Fed rate-hike cycles since World War II have been followed by recession.
On the flip side, the U.S. economy is starting to show more signs of deterioration due to the series of rapid Fed interest-rate increases since last year.
Manufacturers have cut production and are arguably already in recession and the much larger service side of the economy is under more stress lately.
If these trends continue the economy — and inflation — are bound to slow.
The U.S. is still growing for now, however, and the labor market remains an oasis of strength.
Low unemployment and rising wages have allowed Americans to keep spending. And so far they’ve keep the economy out of a widely predicted recession.
Looking ahead: “The U.S. labor market is losing some momentum, but remains far too vibrant for the Fed to pause [its rate-hike campaign] in May,” said senior economist Sal Guatieri at BMO Capital Markets
“Although job growth is gradually slowing, it remains too strong for the Federal Reserve,” said Sal Guatieri of PNC Financial Services.
See: Traders see little chance interest rates will end up where Fed thinks in 2023
Market reaction: Futures contracts on the Dow Jones Industrial Average
YM00,
rose 64 points, or 0.2%, to 33,723. S&P 500 futures
ES00,
gained 9.75 points, or 0.2%, to 4,141.75. Stock trading resumes again on Monday.
The yield on the 10-year Treasury
TMUBMUSD10Y,
jumped to 3.36%.
MarketWatch personal finance: U.S. economy added 236,000 jobs in March. Is this your last chance to jump ship?
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U.S. stock-index futures turned higher in a holiday-shortened session after a solid March jobs report, though investors won’t fully digest the data until next week with cash trading in equities closed due to the Good Friday holiday.
Trading in stock-index futures closed at 9:15 a.m. Eastern. Stock-index futures resume trading at their regular time, 6 p.m., on Sunday, as U.S. markets return to normal trading hours Monday.
With the exception of the Dow industrials, U.S. stocks finished the holiday-shortened week lower on Thursday after three consecutive weekly gains for the S&P 500 and the tech-heavy Nasdaq. The Dow
DJIA,
rose 0.6% for the week, while the S&P 500
SPX,
shed 0.1% and the Nasdaq
COMP,
slumped 1.1%, after scoring its best quarter since 2020.
The U.S. added 236,000 new jobs in March, defying the Federal Reserve’s hopes for a big slowdown in hiring and possibly making it harder for the central bank to tame inflation. Economists polled by The Wall Street Journal had forecast 238,000 new jobs.
The unemployment rate, meanwhile, slipped to 3.5% from 3.6%. Wages rose 0.3% last month.
“This month’s report indicates that interest rate hikes have yet to impact tight unemployment conditions,” said Steve Rick, chief economist at CUNA Mutual Group, in emailed comments.
Treasury yields popped higher and the dollar rose, though traders noted conditions were thin due to the holiday. Fed-funds futures showed traders pricing in a nearly 70% chance the Federal Reserve will lift interest rates by a quarter-point in May and a roughly 30% chance policy makers will leave rates unchanged. Traders had seen a roughly 50-50 split on Thursday.
“Today’s jobs report is consistent with a slow-moving recession unfolding in the U.S. and one that does not point to immediate resolution of inflation concerns,” said Jason Pride, chief investment officer of private wealth at Glenmede, in a note. “As such, the odds of another quarter-point rate hike in May should go higher as the data does not appear to justify a Fed pause.”
That said, policy makers and investors will see a raft of data before the next Fed meeting, including next week’s consumer-price index reading, Pride noted.
Good Friday is a market holiday but not a U.S. federal holiday. That means the U.S. Labor Department released its March jobs report, as usual. Bond traders will see a half day of trading, with Sifma recommending a noon ET close to allow a reaction to the data.
Read: Why Good Friday complicates how stock-market traders will digest March jobs report
Investors saw a stream of jobs-related data over the course of the past week. Data on Tuesday showed the number of U.S. job openings dropped below 10 million to a 21-month low, indicating a hot jobs market may be starting to lose some sizzle.
ADP on Wednesday said the private sector added 145,000 jobs in March, well below the 210,000 expected by economists. Weekly jobless claims data on Thursday morning showed first-time applications for benefits last week came in higher than expected.
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The numbers: The U.S. added a robust 236,000 new jobs in March, defying the Federal Reserve’s hopes for a big slowdown in hiring as the central bank struggles to tame inflation. The consensus economist forecast called for a nonfarm-payrolls expansion of 238,000.
The solid increase in employment last month followed a revised 326,000 gain in February and a gain of 472,000 in January.
While the increase in hiring was the smallest monthly rise in more than two years, the number of jobs created last month was much greater than is typical.
The unemployment rate, meanwhile, slipped to 3.5% from 3.6% as more people searched for and found work. That’s another sign of labor-market vigor.
There was some good news in the report for the Fed, though.
Wage growth continued to moderate closer to level the Fed would prefer. Hourly wages increased a mild 0.3% last month, the government said Friday.
The increase in pay over the past year also slowed again to a nearly two-year low of 4.2% from 4.6% in February.
What’s more, the share of people working or looking for work rose a tick to 62.6%. That’s the highest labor-force participation rate since February 2020, the last month before the pandemic’s onset.
When more people look for work, companies don’t have to compete as hard for workers via higher pay.
Emerging evidence of slack in a muscular U.S. labor market could encourage the Fed to take a breather after a rapid series of interest-rate increases.
Still, the U.S. has added a whopping 1 million–plus new jobs in the first three months of the year. The labor market is not cooling off as much as the Fed would like.
“ The Black unemployment rate fell to 5% last month, the lowest level since records began being kept in the early 1970s. ”
Stock-index futures rallied after the report, though the stock market itself is officially closed due to the Good Friday holiday.
See: Why Good Friday complicates how stock-market traders will digest March jobs report
Key details: About one-third of the new jobs created last month — 72,000 — were at service-sector companies such as bars and restaurants whose employment still has not returned to prepandemic levels.
Americans are going out to eat a lot and spending relatively more on services than on goods.
Government employment increased by 47,000. Hiring also rose at professional businesses and in healthcare. Retailers cut 15,000 jobs.
Employment fell slightly in manufacturing and construction, or goods-producing industries, which are under more pressure from rising interest rates.
The strong labor market has benefited all groups, but especially Black Americans. The Black unemployment rate fell to 5% last month, the lowest level since records began being kept in the early 1970s.
Big picture: The ongoing tightness in the labor market could inflame inflation and even push the Fed to raise interest rates more than currently forecast to try to get prices under control.
Higher borrowing costs reduce inflation by slowing the economy, but most Fed rate-hike cycles since World War II have been followed by recession.
On the flip side, the U.S. economy is starting to show more signs of deterioration due to the series of rapid Fed interest-rate increases since last year.
Manufacturers have cut production and are arguably already in recession and the much larger service side of the economy is under more stress lately.
If these trends continue the economy — and inflation — are bound to slow.
The U.S. is still growing for now, however, and the labor market remains an oasis of strength.
Low unemployment and rising wages have allowed Americans to keep spending. And so far they’ve keep the economy out of a widely predicted recession.
Looking ahead: “The U.S. labor market is losing some momentum, but remains far too vibrant for the Fed to pause [its rate-hike campaign] in May,” said senior economist Sal Guatieri at BMO Capital Markets
“Although job growth is gradually slowing, it remains too strong for the Federal Reserve,” said Sal Guatieri of PNC Financial Services.
See: Traders see little chance interest rates will end up where Fed thinks in 2023
Market reaction: Futures contracts on the Dow Jones Industrial Average
YM00,
rose 64 points, or 0.2%, to 33,723. S&P 500 futures
ES00,
gained 9.75 points, or 0.2%, to 4,141.75. Stock trading resumes again on Monday.
The yield on the 10-year Treasury
TMUBMUSD10Y,
jumped to 3.36%.
MarketWatch personal finance: U.S. economy added 236,000 jobs in March. Is this your last chance to jump ship?
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[ad_1]
The numbers: The U.S. added a robust 236,000 new jobs in March, defying the Federal Reserve’s hopes for a big slowdown in hiring as the central bank struggles to tame inflation. The consensus economist forecast called for a nonfarm-payrolls expansion of 238,000.
The solid increase in employment last month followed a revised 326,000 gain in February and a gain of 472,000 in January.
While the increase in hiring was the smallest monthly rise in more than two years, the number of jobs created last month was much greater than is typical.
The unemployment rate, meanwhile, slipped to 3.5% from 3.6% as more people searched for and found work. That’s another sign of labor-market vigor.
There was some good news in the report for the Fed, though.
Wage growth continued to moderate closer to level the Fed would prefer. Hourly wages increased a mild 0.3% last month, the government said Friday.
The increase in pay over the past year also slowed again to a nearly two-year low of 4.2% from 4.6% in February.
What’s more, the share of people working or looking for work rose a tick to 62.6%. That’s the highest labor-force participation rate since February 2020, the last month before the pandemic’s onset.
When more people look for work, companies don’t have to compete as hard for workers via higher pay.
Emerging evidence of slack in a muscular U.S. labor market could encourage the Fed to take a breather after a rapid series of interest-rate increases.
Still, the U.S. has added a whopping 1 million–plus new jobs in the first three months of the year. The labor market is not cooling off as much as the Fed would like.
“ The Black unemployment rate fell to 5% last month, the lowest level since records began being kept in the early 1970s. ”
Stock-index futures rallied after the report, though the stock market itself is officially closed due to the Good Friday holiday.
See: Why Good Friday complicates how stock-market traders will digest March jobs report
Key details: About one-third of the new jobs created last month — 72,000 — were at service-sector companies such as bars and restaurants whose employment still has not returned to prepandemic levels.
Americans are going out to eat a lot and spending relatively more on services than on goods.
Government employment increased by 47,000. Hiring also rose at professional businesses and in healthcare. Retailers cut 15,000 jobs.
Employment fell slightly in manufacturing and construction, or goods-producing industries, which are under more pressure from rising interest rates.
The strong labor market has benefited all groups, but especially Black Americans. The Black unemployment rate fell to 5% last month, the lowest level since records began being kept in the early 1970s.
Big picture: The ongoing tightness in the labor market could inflame inflation and even push the Fed to raise interest rates more than currently forecast to try to get prices under control.
Higher borrowing costs reduce inflation by slowing the economy, but most Fed rate-hike cycles since World War II have been followed by recession.
On the flip side, the U.S. economy is starting to show more signs of deterioration due to the series of rapid Fed interest-rate increases since last year.
Manufacturers have cut production and are arguably already in recession and the much larger service side of the economy is under more stress lately.
If these trends continue the economy — and inflation — are bound to slow.
The U.S. is still growing for now, however, and the labor market remains an oasis of strength.
Low unemployment and rising wages have allowed Americans to keep spending. And so far they’ve keep the economy out of a widely predicted recession.
Looking ahead: “The U.S. labor market is losing some momentum, but remains far too vibrant for the Fed to pause [its rate-hike campaign] in May,” said senior economist Sal Guatieri at BMO Capital Markets
“Although job growth is gradually slowing, it remains too strong for the Federal Reserve,” said Sal Guatieri of PNC Financial Services.
See: Traders see little chance interest rates will end up where Fed thinks in 2023
Market reaction: Futures contracts on the Dow Jones Industrial Average
YM00,
rose 64 points, or 0.2%, to 33,723. S&P 500 futures
ES00,
gained 9.75 points, or 0.2%, to 4,141.75. Stock trading resumes again on Monday.
The yield on the 10-year Treasury
TMUBMUSD10Y,
jumped to 3.36%.
MarketWatch personal finance: U.S. economy added 236,000 jobs in March. Is this your last chance to jump ship?
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Be careful what you wish for. U.S. job openings dropped below 10 million, a symbolic sign that the Federal Reserve’s efforts to combat inflation by sapping labor-market demand was working — and U.S. stocks promptly fell. Perhaps the bigger issue is that investors were not willing to push stocks out of the 3,800 to 4,200 range the S&P 500
SPX,
has been trading in for months.
It might not be the most obvious time to be discussing a commodity supercycle, with recession talk growing, but then that’s what makes this call more interesting. Strategists at Wells Fargo investment Institute argue it’s year three of a commodity supercycle, which they say has plenty more room to run.
John LaForge, head of real asset strategy, and Mason Mendez, investment strategy analyst, say commodities are like black holes, in that escaping the gravity of a supercycle is difficult for any individual commodity. They point to this chart, looking at commodity momentum since 1800, plotted in 10-year moving averages, which shows that food, energy and the commodity complex as a whole tend to follow each other around.
Right now nearly all the signs, both technical and fundamental, point to a commodity bull market, they say. The early signs are mostly shifting prices and technical indicators, and the latter signs are more fundamental in nature, like restrained supplies. “The bottom line is that the key early technical indicators are confirming to us that a new supercycle likely began in 2020.”
The analysts went further into depth on what they call washed-out sentiment. They say the process goes something like this: near the end of a commodity bull supercycle, prices go so high that oversupplies become rampant and need to be worked off, which results in investment stopping to flow into production. They say that in both corn
C00,
and gold
GC00,
— not commodities with much in common — supply growth rates have turned negative in recent years. Both showed similar conditions at the start of the last supercycle, in 1999.
They advise using commodities as portfolio diversifiers, which certainly would have helped last year, when both stocks and bonds fell but the Bloomberg commodity index rose nearly 16%. They highlight commodity prices typically move differently than stocks or bonds over the long run. And they say that supercycles have historically lasted a decade or longer, and the shortest commodity bull market on record was nine years.
One caveat: the speed of technology advances. Sometimes technology can help fuel demand, but conversely, to the extent technology can make commodities easier to extract, it can also buoy supplies. The obvious example here, not pointed out in the note, is the shale-oil revolution. There’s an interesting article in The Economist (subscription required), how copper has yet to be the beneficiary of a technology boost.
U.S. stock futures
ES00,
NQ00,
edged lower. Oil prices
CL.1,
fell but held over $80 per barrel. The yield on the 10-year Treasury
TMUBMUSD10Y,
turned lower after the latest jobs data.
For more market updates plus actionable trade ideas for stocks, options and crypto, subscribe to MarketDiem by Investor’s Business Daily.
ADP reported a slowdown in private-payrolls growth to 145,000 jobs in March, as well as a slowing pace of pay growth. Shortly after the open comes the the Institute for Supply Management’s services index. Cleveland Fed President Loretta Mester said interest rates would need to be increased “somewhat” from here.
Overseas, New Zealand’s central bank made a larger-than-expected 50 basis point rate hike, while a joint forecast of Germany’s leading institutes upgraded its view on the eurozone’s largest economy, now expecting a 0.3% advance.
Walmart
WMT,
forecast earnings in a range of $5.90 to $6.05 per share for its fiscal year, below the FactSet-compiled analyst estimate of $6.11.
Johnson & Johnson
JNJ,
proposed to pay up to $8.9 billion over 25 years to settle claims connected with cosmetic-talc litigation.
Alphabet’s
GOOGL,
Google says its chips are faster and more power efficient than comparable chips from Nvidia
NVDA,
Western Alliance Bancorp
WAL,
shares fell in premarket trade after the regional lender detailed the latest losses in its portfolio of loans and securities.
Brandon Johnson was elected mayor of Chicago, the country’s third-largest city. Former President Donald Trump was defiant in a speech to supporters after his indictment.
A popular Fed program is draining funds from the banking system.
Instant videos could be the next leap in artificial-intelligence technology.
OpenAI, the tech company backed by Microsoft
MSFT,
is facing what is believed to be its first defamation lawsuit over a claim by its ChatGPT chatbot that an Australian mayor served time in prison for bribery.
These were the most active stock-market tickers as of 6 a.m. Eastern.
| Ticker | Security name |
|
TSLA, |
Tesla |
|
AMC, |
AMC Entertainment |
|
BBBY, |
Bed Bath & Beyond |
|
GME, |
GameStop |
|
BUD, |
Anheuser-Busch InBev |
|
APE, |
AMC Entertainment preferreds |
|
MULN, |
Mullen Automotive |
|
NIO, |
Nio |
|
AAPL, |
Apple |
|
AI, |
C3.ai |
Sure, higher gasoline prices naturally drive demand for electric vehicles. But at what point do high electricity prices make it more cost-effective to buy old gas guzzlers? This chart from Barclays breaks it down — roughly, 10 cents per kilowatt hour equates to $1 per gallon. Right now it’s cheaper to fill a car at the pump than recharge at peak hours.
Easter means the annual production of a 15,000-egg omelette.
This man was successful in his marriage proposal, at the cost of a one-year ban from Dodger Stadium.
Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. The emailed version will be sent out at about 7:30 a.m. Eastern.
Listen to the Best New Ideas in Money podcast with MarketWatch reporter Charles Passy and economist Stephanie Kelton.
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BEIJING (AP) — Asian stock markets fell Monday after Swiss authorities arranged the takeover of troubled Credit Suisse amid fears of a global banking crisis ahead of a Federal Reserve meeting to decide on more possible interest rate hikes.
Shanghai, Tokyo and Hong Kong declined. Oil prices retreated, and U.S. equity futures were tilting lower after initially rising on the takeover news.
Swiss authorities on Sunday announced UBS would acquire its smaller rival as regulators try to ease fears about banks following the collapse of two U.S. lenders. Central banks announced coordinated efforts to stabilize lenders including a facility to borrow U.S. dollars if necessary.
Investors worry banks are cracking under the strain of unexpectedly fast, large rate hikes over the past year to cool economic activity and inflation. That caused prices of bonds and other assets on their books to fall, fueling unease about the industry’s financial health.
“Investors are waiting to see where the dust settles on the banking saga before making any bold moves,” Stephen Innes of SPI Asset Management said in a report.
The Hang Seng
HSI,
in Hong Kong lost 3% to 18,920 and the Nikkei 225
NIK,
in Tokyo shed 1.2% to 26,990.25.
The Shanghai Composite Index
SHCOMP,
lost 0.2% to 3,241 after the Chinese central bank on Friday freed up additional money for lending by reducing the amount of money commercial are required to hold in reserve. Hong Kong shares of HSBC
5,
dropped over 6%.
The Kospi
180721,
in Seoul retreated 0.6% to 2,382.03 and Sydney’s S&P-ASX 200
XJO,
lost 1.4% to 6,900.00.
India’s Sensex opened down 1.1% at 57,341.79. New Zealand and Southeast Asian markets also declined.
The Swiss government said UBS will acquire Credit Suisse for almost $3.25 billion after a plan for the troubled lender to borrow as much as $54 billion from Switzerland’s central bank failed to reassure investors and customers.
U.S. regulators have also sought to calm fears over threats to banking systems. The Federal Reserve said cash-short banks had borrowed about $300 billion from the Federal Reserve in the week up to Thursday.
Separately, New York Community Bank
NYCB,
agreed to buy a significant chunk of the failed Signature Bank in a $2.7 billion deal, the Federal Deposit Insurance Corp. said late Sunday. The FDIC said $60 billion in Signature Bank’s loans will remain in receivership and are expected to be sold off in time.
Concerns persist about other lenders with shaky finances. Credit Suisse is among 30 institutions known as globally systemically important banks. Ahead of its takeover, Wall Street’s benchmark S&P 500 index
SPX,
lost 1.1% on Friday to 3,916.64.
Shares of First Republic Bank
FRC,
sank nearly 33% to bring their plunge for the week to 71.8%.
The Dow Jones Industrial Average
DJIA,
lost 1.2% to 31,861.98. The Nasdaq Composite
COMP,
fell 0.7% to 11,630.51. Dow futures
YM00,
fell 0.3% early Monday, while S&P 500 futures
ES00,
and Nasdaq-100 futures
NQ00,
were steady.
The unexpectedly large, fast rate hikes by the Fed and other central banks to cool inflation that is close to multi-decade highs have caused prices of bonds and other assets on their books to fall.
Traders expect last week’s turmoil to push the Fed to limit a rate hike at its meeting this week to 0.25 percentage points. That would be the same as the previous increase and half the margin traders expected earlier.
A survey released Friday by the University of Michigan showed inflation expectations among American consumers are falling. That matters to the Fed, which has said such expectations can feed into virtuous and vicious cycles.
In energy markets, benchmark U.S. crude
CL.1,
sank 93 cents to $64.81 in electronic trading on the New York Mercantile Exchange. The contract fell $1.61 on Friday to $66.74. Brent crude
BRN00,
the price basis for international oils, declined $1.05 cents to $71.92 per barrel in London. It retreated $1.73 the previous session to $72.97.
The dollar
DXY,
gained to 131.83 yen from Friday’s 131.67 yen. The euro
EURUSD,
declined to $1.0676 from $1.0681.
MarketWatch contributed to this report.
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U.S. stock-index futures opened with modest gains Sunday evening as investors assessed a historic deal to rescue troubled Swiss lender Credit Suisse, the latest maneuver by authorities attempting to prevent a deeper loss of confidence in the global banking system.
Swiss bank UBS Group
UBS,
agreed to buy rival Credit Suisse
CS,
CSGN,
for more than $3 billion, a substantial discount to its Friday closing price, in a deal shepherded by Swiss regulators and closely watched by monetary and economic policy makers around the world.
Don’t miss: Here’s why UBS’s deal to buy Credit Suisse matters to U.S. investors
Also Sunday, the Federal Reserve and five other major central banks announced they were taking steps to ensure that U.S. dollars remained readily accessible throughout the global financial system.
Futures on the Dow Jones Industrial Average
YM00,
rose 123 points, or 0.4%, while futures on the S&P 500
ES00,
and Nasdaq-100
NQ00,
were also up 0.4%,
Oil futures ticked higher after suffering their worst week of 2023 and ending Friday at their lowest since December 2021, with analysts tying the plunge largely to rising recession fears. April West Texas Intermediate crude
CL.1,
CLJ23,
rose 0.3% to $66.92 a barrel on the New York Mercantile Exchange, while May Brent crude
BRN00,
the global benchmark, ticked up 0.1% to $73.05 a barrel on ICE Futures Europe.
The positive initial tone in markets late Sunday was reflected in a weaker tone for the Japanese yen, which has seen haven-related support this month on rising banking worries. The U.S. dollar was up 0.3% versus the Japanese currency
USDJPY,
at 132.18 yen. The ICE U.S. Dollar Index
DXY,
a measure of the currency against a basket of six major rivals, was up 0.1%.
Futures on U.S. Treasurys
TY00,
which also tend to serve as a haven during periods of crisis, were slightly lower. Treasurys rose sharply last week, dragging down yields, which move opposite to price, in volatile trading.
Credit Suisse’s 167-year run came to an end after a collapse in the value of its shares and bonds last week. Economists, investors and authorities worried that a collapse by Credit Suisse could amplify contagion fears in the global banking system after the demise earlier this month of California’s Silicon Valley Bank, or SVB.
Economists expect U.S. banks to significantly tighten lending standards in response to the upheaval, raising the odds of the economy falling into recession.
The Tell: ‘Hard landing’ in store for U.S. economy as bank crisis intensifies: economist
As a result, fed-funds futures traders abandon expectations for a return to a supersized 50-basis-point, or half-percentage-point, rise in the Fed’s benchmark interest rate when policy makers complete a two-day meeting on Wednesday. The market at the end of last week showed traders saw a nearly 75% chance of a 25-basis-point hike, and a roughly 25% chance the Fed would hold rates unchanged.
Traders also priced in the potential for significant rate cuts by the end of the year, signaling rising recession expectations. Those shifting expectations helped drive the Treasury rally, particularly for the policy-sensitive 2-year note
TMUBMUSD02Y,
Analysts said the Fed may be reluctant to hold off on a rate hike this week given still-elevated inflation readings and data so far that that shows the job market remains tight. Some economists see the Fed echoing the European Central Bank’s lead from last week, when it followed through with an earlier pledge to hike rates by 50 basis points while making clear that further rate moves would depend on future developments and data.
Don’t miss: What’s at stake for stocks, bonds as Federal Reserve weighs bank chaos against inflation fight
“While the Fed is obviously wary of contagion risks, it still views the banking sector as being well-capitalized, and it will want to stress that the inflation battle is not won, and it remains too high, so a 25-bps hike seems very likely, though like the ECB it will likely stress a high level of uncertainty, and offer no guidance, and emphasize data and financial conditions dependency,” said Marc Ostwald, London-based chief economist and global strategist at ADM Investor Services, in a note.
Despite efforts by the Fed and other U.S. regulators to ringfence SVB and a pair of other collapsed banks while moving to backstop deposits, other regional banks have faced significant pressure. While all depositors at those banks were made whole, calls have increased for the U.S. to formally remove a $250,000 cap on insured deposits.
Meanwhile, First Republic Bank
FRC,
saw its credit rating downgraded further into junk territory by S&P Global Ratings, news reports said. The ratings firm cut the bank’s credit rating three notches to B-plus from BB-plus and warned further downgrades were possible, according to Reuters.
First Republic has been a top concern for investors and regulators following the collapse of SVB. Last week a group of 11 large banks agreed to provide a combined $30 billion in deposits to First Republic in an effort to shore up confidence in the lender. Shares of First Republic have plunged more than 80% so far in March.
U.S. stocks ended lower Friday amid banking sector fears, with the Dow
DJIA,
booking back-to-back weekly losses.
The S&P 500
SPX,
rose 1.4% last week, while the technology-heavy Nasdaq Composite
COMP,
climbed 4.4% in its biggest weekly percentage gain since January, according to Dow Jones Market Data.
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U.S. regulators came to the rescue of Silicon Valley Bank depositors late Sunday, triggering a modest relief rally in stock-index futures.
But investors were left to weigh the outlook for Federal Reserve rate increases after the central bank’s aggressive tightening was flagged by economists and analysts for setting the stage for the second-largest bank failure in U.S. history.
Federal regulators said depositors at Silicon Valley Bank, or SVB, would have access to all deposits on Monday morning. That includes uninsured deposits — those exceeding the FDIC’s $250,000 cap — in a move that analysts said would help avert runs similar to the event that capsized SVB from occurring elsewhere. SVB
SIVB,
stock and bondholders, however, will be wiped out.
Regulators said New York’s Signature Bank was also closed on Sunday and that its depositors would also be made whole.
The Fed also announced a new emergency loan program that it said would help assure banks have the ability to meet the needs of all their depositors.
“The American people and American businesses can have confidence that their bank deposits will be there when they need them,” President Joe Biden said in a statement Sunday night. “I am firmly committed to holding those responsible for this mess fully accountable and to continuing our efforts to strengthen oversight and regulation of larger banks so that we are not in this position again,” he said, adding that he will deliver additional comments Monday.
A deal that spared depositors would be expected to let stocks “rally strongly,” said Barry Knapp, managing partner and director of research at Ironsides Macroeconomics, in a phone interview ahead of the announcement Sunday afternoon. Conversely, measures that would have forced depositors to take a hit would have had the potential to spark an ugly reaction, he said.
Futures on the Dow Jones Industrial Average
YM00,
rose 240 points, or 0.8% following the announcement, while S&P 500 futures
ES00,
were up 1% and Nasdaq-100 futures
NQ00,
gained 1.3%.
Investors will also be assessing the fallout to see if it complicates the Federal Reserve’s plans to hike interest rates further and potentially faster than previously expected in its bid to tamp down inflation.
SVB was closed by California regulators on Friday and taken over by the Federal Deposit Insurance Corp. Regulators raced over the weekend to come to a resolution for depositors after uncertainty around SVB triggered a sharp market selloff late last week.
“In what is an already jittery market, the emotional response to a failed bank reawakens our collective muscle memory of the GFC,” Art Hogan, chief market strategist at B. Riley Financial Wealth, told MarketWatch in an email, referring to the 2007-2009 financial crisis. “When the dust settles, we will likely find that SVB is not a ‘systematic’ issue.”
In a statement Sunday, Securities and Exchange Commission Chair Gary Gensler warned that regulators are on the lookout for misconduct: “In times of increased volatility and uncertainty, we at the SEC are particularly focused on monitoring for market stability and identifying and prosecuting any form of misconduct that might threaten investors, capital formation, or the markets more broadly. Without speaking to any individual entity or person, we will investigate and bring enforcement actions if we find violations of the federal securities laws.”
Weekend Snapshot: What’s next for stocks after Silicon Valley Bank collapse as investors await crucial inflation reading
Knapp said a deal that leaves depositors whole would lift the overall market and allow bank stocks, which got hammered last week, to “rip” higher “because they are cheap” and the banking system “as a whole…is in really good shape.”
Banking stocks dropped sharply Thursday, led by shares of regional institutions, and extended their losses Friday. The selloff in bank stocks pulled down the broader market, leaving the S&P 500
SPX,
down 4.6%, nearly wiping out the large-cap benchmark’s early 2023 gains. The Dow
DJIA,
saw a 4.6% weekly fall, while the Nasdaq Composite
COMP,
declined 4.7%.
Investors sold stocks but piled into safe-haven U.S. Treasurys, prompting a sharp retreat in yields, which move opposite to prices.
SVB’s failure is being blamed on a mismatch between assets and liabilities. The bank catered to tech startups and venture-capital firms. Deposits grew rapidly and were placed in long-dated bonds, particularly government-backed mortgage securities. As the Federal Reserve began aggressively raising interest rates roughly a year ago, funding sources for tech startups dried up, putting pressure on deposits. At the same time, Fed rate hikes triggered a historic bond-market selloff, putting a big dent in the value of SVB’s securities holdings.
SVB was forced to sell a large chunk of those holdings at a loss to meet withdrawals, leading it to plan a dilutive share offering that stoked a further run on deposits and ultimately led to its collapse.
See: Silicon Valley Bank is a reminder that ‘things tend to break’ when Fed hikes rates
Meanwhile, the Fed’s newly announced Bank Term Lending Program will make loans of up to 12 months to banks and other depository institutions. In a crucial twist, it will allow the assets used as collateral for those loans to be valued at par, or face value, rather than marked to market. The Fed will also accept collateral at its discount window on the same conditions.
“These are strong moves,” said Paul Ashworth, chief North America economist at Capital Economics, in a note.
By accepting collateral at par rather than marking to market means that banks that have accumulated more than $600 billion in unreazlied losses on held-to-maturity Treasury and mortgage-backed securities portfolios and had failed to hedge interest-rate risk should be able to survive, he said.
“Rationally, this should be enough to stop any contagion from spreading and taking down more banks, which can happen in the blink of an eye in the digital age,” Ashworth wrote. “But contagion has always been more about irrational fear, so we would stress that there is no guarantee this will work.”
Analysts and economists had largely dismissed the notion that SVB’s woes marked a systemic problem in the banking system. Instead, SVB appeared to be a “a rather special case of poor balance-sheet management, holding massive amounts of long-duration bonds funded by short-term liabilities,” said Erik F. Nielsen, group chief economics adviser at UniCredit Bank, in a Sunday note.
Mismanagement aside, the Fed’s rate hikes created an environment that set the stage for problems, analysts said. A deeply inverted yield curve, in which short-dated Treasury yields run sharply above longer-dated Treasurys, amplifies liability and asset mismatches.
The yield on the 2-year note early last week traded more than 100 basis points, or a full percentage point, above the 10-year for the first time since the early 1980s.
“Inverting the yield curve as deeply as they did…there’s going to be more accidents if they continue down that path,” Knapp said. “Push that thing to 150 basis points and see what happens. You’re going to have more blowups.”
Fed-funds futures traders last week moved to price in a more-than-70% chance of an outsize 50-basis-point, or half a percentage point, rise in the benchmark interest rate at the Fed’s March meeting after Chair Jerome Powell told lawmakers that rates would need to move higher than previously anticipated. Expectations swung back to a 25-basis-point, or quarter-point move, as the SVB collapse unfolded, with traders also scaling back expectations for when rates will likely peak.
Meanwhile, a flight to safety saw the yield on the 2-year Treasury note, which had earlier in the week topped 5% for the first time since 2007, end the week down 27.3 basis points at 4.586%.
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U.S. regulators came to the rescue of Silicon Valley Bank depositors late Sunday, triggering a modest relief rally in stock-index futures.
But investors were left to weigh the outlook for Federal Reserve rate increases after the central bank’s aggressive tightening was flagged by economists and analysts for setting the stage for the second-largest bank failure in U.S. history.
Federal regulators said depositors at Silicon Valley Bank, or SVB, would have access to all deposits on Monday morning. That includes uninsured deposits — those exceeding the FDIC’s $250,000 cap — in a move that analysts said would help avert runs similar to the event that capsized SVB from occurring elsewhere. SVB
SIVB,
stock and bondholders, however, will be wiped out.
Regulators said New York’s Signature Bank was also closed on Sunday and that its depositors would also be made whole.
The Fed also announced a new emergency loan program that it said would help assure banks have the ability to meet the needs of all their depositors.
A deal that spared depositors would be expected to let stocks “rally strongly,” said Barry Knapp, managing partner and director of research at Ironsides Macroeconomics, in a phone interview ahead of the announcement Sunday afternoon. Conversely, measures that would have forced depositors to take a hit would have had the potential to spark an ugly reaction, he said.
Futures on the Dow Jones Industrial Average
YM00,
rose 240 points, or 0.8% following the announcement, while S&P 500 futures
ES00,
were up 1% and Nasdaq-100 futures
NQ00,
gained 1.3%.
Investors will also be assessing the fallout to see if it complicates the Federal Reserve’s plans to hike interest rates further and potentially faster than previously expected in its bid to tamp down inflation.
SVB was closed by California regulators on Friday and taken over by the Federal Deposit Insurance Corp. Regulators raced over the weekend to come to a resolution for depositors after uncertainty around SVB triggered a sharp market selloff late last week.
“In what is an already jittery market, the emotional response to a failed bank reawakens our collective muscle memory of the GFC,” Art Hogan, chief market strategist at B. Riley Financial Wealth, told MarketWatch in an email, referring to the 2007-2009 financial crisis. “When the dust settles, we will likely find that SVB is not a ‘systematic’ issue.”
In a statement Sunday, Securities and Exchange Commission Chair Gary Gensler warned that regulators are on the lookout for misconduct: “In times of increased volatility and uncertainty, we at the SEC are particularly focused on monitoring for market stability and identifying and prosecuting any form of misconduct that might threaten investors, capital formation, or the markets more broadly. Without speaking to any individual entity or person, we will investigate and bring enforcement actions if we find violations of the federal securities laws.”
Weekend Snapshot: What’s next for stocks after Silicon Valley Bank collapse as investors await crucial inflation reading
Knapp said a deal that leaves depositors whole would lift the overall market and allow bank stocks, which got hammered last week, to “rip” higher “because they are cheap” and the banking system “as a whole…is in really good shape.”
Banking stocks dropped sharply Thursday, led by shares of regional institutions, and extended their losses Friday. The selloff in bank stocks pulled down the broader market, leaving the S&P 500
SPX,
down 4.6%, nearly wiping out the large-cap benchmark’s early 2023 gains. The Dow
DJIA,
saw a 4.6% weekly fall, while the Nasdaq Composite
COMP,
declined 4.7%.
Investors sold stocks but piled into safe-haven U.S. Treasurys, prompting a sharp retreat in yields, which move opposite to prices.
SVB’s failure is being blamed on a mismatch between assets and liabilities. The bank catered to tech startups and venture-capital firms. Deposits grew rapidly and were placed in long-dated bonds, particularly government-backed mortgage securities. As the Federal Reserve began aggressively raising interest rates roughly a year ago, funding sources for tech startups dried up, putting pressure on deposits. At the same time, Fed rate hikes triggered a historic bond-market selloff, putting a big dent in the value of SVB’s securities holdings.
SVB was forced to sell a large chunk of those holdings at a loss to meet withdrawals, leading it to plan a dilutive share offering that stoked a further run on deposits and ultimately led to its collapse.
See: Silicon Valley Bank is a reminder that ‘things tend to break’ when Fed hikes rates
Meanwhile, the Fed’s newly announced Bank Term Lending Program will make loans of up to 12 months to banks and other depository institutions. In a crucial twist, it will allow the assets used as collateral for those loans to be valued at par, or face value, rather than marked to market. The Fed will also accept collateral at its discount window on the same conditions.
“These are strong moves,” said Paul Ashworth, chief North America economist at Capital Economics, in a note.
By accepting collateral at par rather than marking to market means that banks that have accumulated more than $600 billion in unreazlied losses on held-to-maturity Treasury and mortgage-backed securities portfolios and had failed to hedge interest-rate risk should be able to survive, he said.
“Rationally, this should be enough to stop any contagion from spreading and taking down more banks, which can happen in the blink of an eye in the digital age,” Ashworth wrote. “But contagion has always been more about irrational fear, so we would stress that there is no guarantee this will work.”
Analysts and economists had largely dismissed the notion that SVB’s woes marked a systemic problem in the banking system. Instead, SVB appeared to be a “a rather special case of poor balance-sheet management, holding massive amounts of long-duration bonds funded by short-term liabilities,” said Erik F. Nielsen, group chief economics adviser at UniCredit Bank, in a Sunday note.
Mismanagement aside, the Fed’s rate hikes created an environment that set the stage for problems, analysts said. A deeply inverted yield curve, in which short-dated Treasury yields run sharply above longer-dated Treasurys, amplifies liability and asset mismatches.
The yield on the 2-year note early last week traded more than 100 basis points, or a full percentage point, above the 10-year for the first time since the early 1980s.
“Inverting the yield curve as deeply as they did…there’s going to be more accidents if they continue down that path,” Knapp said. “Push that thing to 150 basis points and see what happens. You’re going to have more blowups.”
Fed-funds futures traders last week moved to price in a more-than-70% chance of an outsize 50-basis-point, or half a percentage point, rise in the benchmark interest rate at the Fed’s March meeting after Chair Jerome Powell told lawmakers that rates would need to move higher than previously anticipated. Expectations swung back to a 25-basis-point, or quarter-point move, as the SVB collapse unfolded, with traders also scaling back expectations for when rates will likely peak.
Meanwhile, a flight to safety saw the yield on the 2-year Treasury note, which had earlier in the week topped 5% for the first time since 2007, end the week down 27.3 basis points at 4.586%.
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Pour one out for the beleaguered economists, who for once got an important indicator, the consumer price index, right on the nose, after CPI fell 0.1% in December, while core prices rose 0.3%.
“The 2021 surge in durable goods demand normalized, and the resulting collapse in durable goods price inflation was stunningly fast,” says Paul Donovan, chief economist of UBS Global Wealth Management.
“The commodity wave of inflation is fading, and that leaves the profit margin expansion in focus,” he adds. What a good time for earnings season to be upon us, and what do you know, it is, kicking off with the banking sector on Friday before broadening out next week.
Strategists at Goldman Sachs have a new note out, saying that the market is pricing in a soft landing even though the trend of earnings revisions points to a hard landing.
They’re not that optimistic — even in the soft-landing scenario, the team led by David Kostin say the S&P 500
SPX,
will end the year right around current levels, at 4,000. But they identify 46 stocks that could benefit — profitable, cyclical companies that are trading at price-to-earnings valuations below their 10-year median, among other factors.
One name jumps out: Tesla
TSLA,
which trades at 22 times forward earnings versus the 10-year median of 117 times. But the other 45 names are less flashy, ranging from Capital One
COF,
and Carlyle Group
CG,
to a host of industrials including 3M
MMM,
Parker-Hannifan
PH,
and Otis Worldwide
OTIS,
As a whole, these typically $10 billion companies are trading at 12 times earnings, versus 17 times usually.
In the hard landing scenario, S&P 500 profit margins would shrink by 125 basis points, to 10.9% — about in line with the median peak-to-trough decline during the eight recessions since 1970, which has been 132 basis points. Consensus expectations are for a 26 basis-point margin decline.
The Goldman team also have a 36 stock screen for a hard landing — profitable companies in defensive industries with a positive dividend yield. They’re typically food, beverage and tobacco companies as well as software and services companies — including Costco Wholesale
COST,
Kroger
KR,
Altria
MO,
Tyson Foods
TSN,
Microsoft
MSFT,
MasterCard
MA,
and Visa
V,
As a whole, these $37 billion companies are trading at 22 times earnings vs. a historical 24 times.
After a 2.3% advance for the S&P 500
SPX,
over the last three sessions, U.S. stock futures
ES00,
NQ00,
declined on Friday.
The yield on the Japanese 10-year bond
TMBMKJP-10Y,
exceeded 0.5%, the Bank of Japan’s yield cap, ahead of next week’s rate decision , prompting a second day of aggressive bond purchases from the central bank.
For more market updates plus actionable trade ideas for stocks, options and crypto, subscribe to MarketDiem by Investor’s Business Daily.
Fourth-quarter earnings were rolling out from Bank of America
BAC,
JPMorgan Chase
JPM,
Citigroup
C,
and Wells Fargo
WFC,
and outside of banks, Delta Air Lines
DAL,
BlackRock
BLK,
and UnitedHealth
UNH,
JPMorgan shares slumped after forecast-beating earnings, though investment bank revenue came in light of estimates. Delta shares also declined after topping earnings estimates.
Tesla
TSLA,
cut prices of Model 3 and Model Y vehicles in the U.S. and elsewhere by up to 20%. The electric vehicle maker stock dropped 6%.
Virgin Galactic
SPCE,
surged after saying it’s on track to launch space-tourism flights in the second quarter.
Apple
AAPL,
says CEO Tim Cook requested, and received, a pay cut after investor criticism.
The University of Michigan’s consumer-sentiment index is due at 10 a.m. Eastern, and Minneapolis Fed President Neel Kashkari and Philadelphia Fed President Patrick Harker are due to speak.
Tyler Winklevoss said charges by the Securities and Exchange Commission brought about Gemini Trust for allegedly offering unregistered securities were “super lame” as it seeks to unfreeze $900 million in investor assets.
There’s a bull market in swearing on corporate earnings calls.
The West is now preparing to send tanks to Ukraine in what could be another escalation of its conflict with Russia, which on Friday claimed victory in the eastern town of Soledar.
A look back at photos of Lisa Marie Presley, who died at age 54.
Here were the most active stock-market tickers as of 6 a.m. Eastern.
| Ticker | Security name |
|
BBBY, |
Bed Bath & Beyond |
|
TSLA, |
Tesla |
|
GME, |
GameStop |
|
AMC, |
AMC Entertainment |
|
MULN, |
Mullen Automotive |
|
NIO, |
Nio |
|
APE, |
AMC Entertainment preferreds |
|
AAPL, |
Apple |
|
SPCE, |
Virgin Galactic |
|
AMZN, |
Amazon.com |
Like a scene out of “Stranger Things” — there’s uproar after new restrictions on the Hasbro
HAS,
game Dungeons & Dragons.
Starting next month, Starbucks
SBUX,
rewards will be less generous for most items, though iced coffee will be easier to get.
Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. The emailed version will be sent out at about 7:30 a.m. Eastern.
Listen to the Best New Ideas in Money podcast with MarketWatch reporter Charles Passy and economist Stephanie Kelton.
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U.S. stock-market futures were muted late Monday, ahead of the first trading day of 2023.
Dow Jones Industrial Average futures
YM00,
jumped more than 200 points out of the gate, but initial enthusiasm quickly waned. By midnight Eastern, they had given up those gains and were about flat; S&P 500 futures
ES00,
and Nasdaq-100 futures
NQ00,
were treading water, slightly in positive territory, after similarly shedding early gains.
On Friday, the Dow Jones Industrial Average
DJIA,
dipped 73.55 points, or 0.2%, to 33,147.25. The S&P 500
SPX,
lost 9.78 points, or 0.3%, to 3,839.50, while the Nasdaq Composite
COMP,
retreated 11.61 points, or 0.1%, to 10,466.48. All three major benchmarks suffered their worst year since 2008 based on percentage declines. The Dow dropped 8.8% in 2022, while the S&P 500 tumbled 19.4% and the tech-heavy Nasdaq plunged 33.1%.
See more: An interest-rate shock wrecked stocks in 2022. What pros say will drive the market in 2023.
U.S. markets were closed Monday in observance of the New Year’s holiday.
Investors are in for a busy shortened week, with a slew of economic data due, including S&P Global manufacturing PMI and construction spending expected Tuesday, the Job Openings and Labor Turnover Survey on Wednesday and the December jobs report due Friday. On Wednesday, the Fed will also release minutes from its latest meeting.
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U.S. stock-market futures inched higher Monday, suggesting slight gains ahead of the first trading day of 2023.
Dow Jones Industrial Average futures
YM00,
jumped more than 200 points out of the gate, but initial enthusiasm quickly waned. But 7 p.m. Eastern, they were up about 75 points, or 0.2%; S&P 500 futures
ES00,
and Nasdaq-100 futures
NQ00,
each rose about 0.2% as well
On Friday, the Dow Jones Industrial Average
DJIA,
dipped 73.55 points, or 0.2%, to 33,147.25. The S&P 500
SPX,
lost 9.78 points, or 0.3%, to 3,839.50, while the Nasdaq Composite
COMP,
retreated 11.61 points, or 0.1%, to 10,466.48. All three major benchmarks suffered their worst year since 2008 based on percentage declines. The Dow dropped 8.8% in 2022, while the S&P 500 tumbled 19.4% and the tech-heavy Nasdaq plunged 33.1%.
See more: An interest-rate shock wrecked stocks in 2022. What pros say will drive the market in 2023.
Markets were closed Monday in observance of the New Year’s holiday.
Investors are in for a busy shortened week, with a slew of economic data due, including S&P Global manufacturing PMI and construction spending expected Tuesday, the Job Openings and Labor Turnover Survey on Wednesday and the December jobs report due Friday. On Wednesday, the Fed will also release minutes from its latest meeting.
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U.S. stock futures rose Monday night, ahead of the final trading week of 2022.
Dow Jones Industrial Average futures
YM00,
gained more than 150 points, or 0.5%, as of 11 p.m. Eastern. S&P 500 futures
ES00,
and Nasdaq-100 futures
NQ00,
were also logging solid gains, indicating positive market moves when regular trading resumes Tuesday from the three-day Christmas holiday.
Oil prices rose
CL.1,
as the U.S. Dollar Index
DXY,
slipped.
Last week, the Dow gained nearly 1%, while the S&P 500 and Nasdaq fell for a third straight week.
See more: What to expect for the stock market in 2023 after the biggest decline since the financial crisis
On Friday, the Dow Jones Industrial Average
DJIA,
rose 176.44 points, or 0.5%, to close at 33,203.93. The S&P 500
SPX,
gained 22.43 points, or 0.6%, finishing at 3,844.82, for a weekly decline of 0.2%. The Nasdaq Composite
COMP,
closed at 10,497.86, up 6.85 points, or 0.4%. For the week, the Nasdaq fell 1.9%.
Friday marked the start of the so-called Santa Claus rally period — the final five trading days of the calendar year and the first two trading days of the new year. That stretch has, on average, produced gains for stocks, but failure to do so is often read as a negative indicator.
Read more: How a Santa Claus rally, or lack thereof, sets the stage for the stock market in first quarter
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U.S. stock futures rose Monday night, ahead of the final trading week of 2022.
Dow Jones Industrial Average futures
YM00,
gained more than 150 points, or 0.5%, as of 11 p.m. Eastern. S&P 500 futures
ES00,
and Nasdaq-100 futures
NQ00,
were also logging solid gains, indicating positive market moves when regular trading resumes Tuesday from the three-day Christmas holiday.
Oil prices rose
CL.1,
as the U.S. Dollar Index
DXY,
slipped.
Last week, the Dow gained nearly 1%, while the S&P 500 and Nasdaq fell for a third straight week.
See more: What to expect for the stock market in 2023 after the biggest decline since the financial crisis
On Friday, the Dow Jones Industrial Average
DJIA,
rose 176.44 points, or 0.5%, to close at 33,203.93. The S&P 500
SPX,
gained 22.43 points, or 0.6%, finishing at 3,844.82, for a weekly decline of 0.2%. The Nasdaq Composite
COMP,
closed at 10,497.86, up 6.85 points, or 0.4%. For the week, the Nasdaq fell 1.9%.
Friday marked the start of the so-called Santa Claus rally period — the final five trading days of the calendar year and the first two trading days of the new year. That stretch has, on average, produced gains for stocks, but failure to do so is often read as a negative indicator.
Read more: How a Santa Claus rally, or lack thereof, sets the stage for the stock market in first quarter
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Monday served as another smackdown for investors who are banking on a Goldilocks economy and a less aggressive Fed.
Some are now not ruling out a Grinch-like turn from the central bank — a 0.75% hike next week instead of the 0.50% markets have been pinning hopes on — following strong data on services, jobs and wages.
It all goes along with the theme of 2022 — expect the unexpected. The relief of moving out of a crippling pandemic was quickly replaced by the biggest war on Europe’s shores in decades, that sparked worldwide inflation surges.
What comes next is anyone’s guess and that brings us to our call of the day via Saxo Bank’s annual “Outrageous Predictions” for 2023.
While some of these will sound crazy, note that the Saxo team, led by Chief Investment Officer Steen Jakobsen, have nailed a few wild prophecies in the past decade. Those include: a Brexit prediction in 2015, a 25% drop for the S&P 500 from its 2007 high in 2008, a tripling of Bitcoin’s value forecast in 2017.
The focus for 2023’s prediction is that “a return to the disinflationary prepandemic dynamic is impossible because we have entered into a global war economy, with every major power across the world now scrambling to shore up their national security on all fronts; whether in an actual military sense, or due to profound supply-chain, energy and even financial insecurities that have been laid bare by the pandemic experience and Russia’s invasion of Ukraine,” says Jakobsen.
As for those predictions, here we go:
The rest of their predictions are here, such as the formation of an EU Armed Forces in 2023 and an “UnBrexit” referendum.
Read: Why Monday’s stock-market rout should be a wake up call for investors
Stocks
DJIA,
SPX,
COMP,
are drifting into the red, with Treasury yields
TMUBMUSD10Y,
TMUBMUSD02Y,
steady, the dollar
DXY,
lower and oil
CL.1,
BRN00,
also down.
For more market updates plus actionable trade ideas for stocks, options and crypto, subscribe to MarketDiem by Investor’s Business Daily.
BioVie stock
BIVI,
is climbing after positive results from the clinical-stage biopharmaceutical company on a drug for Parkinson’s and Alzheimer’s.
NRG Energy
NRG,
agreed to buy Vivint Smart Home
VVNT,
in a $5.2 billion deal. Vivint shares are soaring.
MEI Pharma
MEIP,
shares are tumbing after drugmaker said it would stop developing cancer treatment zandelisib outside of Japan and announces job cuts. Herbalife shares
HLF,
are down 10% after an offering of convertible notes
Powell Industries
POWL,
stock is up 9% after the electrical equipment maker’s well-received results and new orders. Within software Sumo Logic
SUMO,
and GitLab shares
GTLB,
are surging on upbeat results and forecasts.
Layoffs extending beyond tech? PepsiCo
PEP,
is reportedly cutting hundreds of workers at its North American headquarters.
Home builder Toll Brothers
TOL,
will report results after the close.
The October trade deficit jumped 5.4% to $78,2 billion.
The U.S. and EU are reportedly considering fresh steel and aluminum tariffs on China to fight carbon emissions.
“Nothing to be glad about.” An empty, lonely and cold formerly occupied Ukraine city.
Morocco’s World Cup team leans on its secret weapon of parents in the stands.
Why human composting could be the next big thing.
Headed into the holidays, consumers are using savings and credit, says a team of Jefferies analysts led by Corey Tarlowe. “The savings rate continues to trend lower and credit card balances are growing +15% Y/Y. We believe these trends indicate that the consumer is stretched.”
Against this backdrop, they like Costco
COST,
Dollar General
DG,
Target
TGT,
and Walmart
WMT,
These were the top-searched tickers on MarketWatch at 6 a.m.:
| Ticker | Security name |
|
TSLA, |
Tesla |
|
GME, |
GameStop |
|
AMC, |
AMC Entertainment |
|
NIO, |
NIO |
|
BBBY, |
Bed Bath & Beyond |
|
AAPL, |
Apple |
|
APE, |
AMC Entertainment Holdings preferred shares |
|
COSM, |
Cosmos |
|
AMZN, |
Amazon.com |
|
MULN, |
Mullen Automotive |
Tributes pour after “Cheers” star Kirstie Alley dies at 71.
Happy 190th birthday to the world’s oldest tortoise.
A green Grinchy dog for Christmas? Not everyone’s heart grew three sizes.
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