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Tag: Western Alliance Bancorp.

  • This ‘dirt cheap’ regional bank stock could rebound more than 100%, Janney says

    This ‘dirt cheap’ regional bank stock could rebound more than 100%, Janney says

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  • CNBC Daily Open: Investors liked April’s jobs growth

    CNBC Daily Open: Investors liked April’s jobs growth

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    A ‘Now Hiring’ sign posted outside of a restaurant looking to hire workers on May 05, 2023 in Miami, Florida.

    Joe Raedle | Getty Images News | Getty Images

    This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

    Investors liked April’s jobs growth.

    What you need to know today

    • U.S. markets jumped Friday as Apple shares popped and regional bank stocks recovered. Asia-Pacific stocks mostly traded higher Monday. China’s Shanghai Composite rose 1.6% even as economists expect the country’s trade surplus to decrease slightly from March to April.
    • If the White House fails to raise the debt ceiling, there will be a “steep economic downturn” and “economic chaos will ensue,” U.S. Treasury Secretary Janet Yellen warned on Sunday. The U.S. might hit its debt ceiling as early as June 1.
    • PRO During Berkshire’s meeting, Buffett shared his favorite stocks. One of them is a “better business than any we own,” Buffett said. Another is “one of the best-managed and important companies in the world” — yet Buffett decided to sell shares in it. Here’s why.

    The bottom line

    A strong jobs reading, a note from JPMorgan and an optimistic earnings report from Apple buoyed U.S. markets Friday.

    The gains made by stocks were impressive — especially after the previous few days of renewed banking fears — so let’s start with them. The Dow Jones Industrial Average added 1.65%, the S&P 500 rose 1.85% and the Nasdaq Composite jumped 2.25%.

    The tech-heavy Nasdaq’s jump is straightforward: Apple shares leaped 4.7% after the company reported better-than-expected earnings and revenue Thursday. Other Big Tech companies, like Microsoft and Amazon, rose alongside Apple.

    Broader markets were boosted by April’s jobs report, which showed a higher-than-expected increase in jobs growth and an unemployment rate of 3.4% — a record low since 1969.

    Markets’ reaction might seem confusing at first. A tight labor market implies the Federal Reserve might continue raising interest rates. Generally speaking, that’s bad for markets. Recall January’s jobs report: There were 517,000 new jobs in December, almost three times the forecast. Markets fell on the news.  

    Yet this time, markets rallied, suggesting that the worry gripping traders is one of recession, not inflation. A strong jobs market increases the probability that the U.S. economy can tame inflation without contracting too severely.

    Indeed, there are signs the U.S. economy has been slowing. At the end of April, we learned that GDP rose at an annualized 1.1% pace in the first quarter, about half of what analysts had estimated. The banking crisis — resurrected by First Republic’s failure — is spreading again, causing banks to lend less and ultimately slow growth even further.

    There’s good news on that front, however. On Friday, banking titan JPMorgan Chase upgraded three regional bank stocks to “overweight,” saying that Western Alliance, Zions Bancorp and Comerica were all “substantially mispriced” — as I had argued in Friday’s edition of this newsletter.

    Investors digested the note and pushed the SPDR S&P Regional Banking ETF (KRE) up 6.3%. Individual bank stocks saw more drastic jumps: PacWest surged 81.7% and Western Alliance popped 49.2%.

    But make no mistake: This isn’t a sign that banking fears have been put to rest definitively. If stocks can swing so drastically in one direction on the back of a note, they can do so in the other at the faintest whisper of trouble. What we’re seeing isn’t renewed confidence, but continued volatility.

    Subscribe here to get this report sent directly to your inbox each morning before markets open.

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  • CNBC Daily Open: Investors like jobs growth

    CNBC Daily Open: Investors like jobs growth

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    A ‘Now Hiring’ sign posted outside of a restaurant looking to hire workers on May 05, 2023 in Miami, Florida.

    Joe Raedle | Getty Images News | Getty Images

    This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

    Investors like jobs growth.

    What you need to know today

    • U.S. markets jumped Friday as Apple shares popped and regional bank stocks recovered. Europe’s Stoxx 600 rose 1.1% — Adidas, with an 8.9% surge, was a big winner in the index.
    • If the White House fails to raise the debt ceiling, there will be a “steep economic downturn” and “economic chaos will ensue,” U.S. Treasury Secretary Janet Yellen warned on Sunday. The U.S. might hit its debt ceiling as early as June 1.
    • PRO During Berkshire’s meeting, Buffett shared his favorite stocks. One of them is a “better business than any we own,” Buffett said. Another is “one of the best-managed and important companies in the world” — yet Buffett decided to sell shares in it. Here’s why.

    The bottom line

    A strong jobs reading, a note from JPMorgan and an optimistic earnings report from Apple buoyed U.S. markets Friday.

    The gains made by stocks were impressive — especially after the previous few days of renewed banking fears — so let’s start with them. The Dow Jones Industrial Average added 1.65%, the S&P 500 rose 1.85% and the Nasdaq Composite jumped 2.25%.

    The tech-heavy Nasdaq’s jump is straightforward: Apple shares leaped 4.7% after the company reported better-than-expected earnings and revenue Thursday. Other Big Tech companies, like Microsoft and Amazon, rose alongside Apple.

    Broader markets were boosted by April’s jobs report, which showed a higher-than-expected increase in jobs growth and an unemployment rate of 3.4% — a record low since 1969.

    Markets’ reaction might seem confusing at first. A tight labor market implies the Federal Reserve might continue raising interest rates. Generally speaking, that’s bad for markets. Recall January’s jobs report: There were 517,000 new jobs in December, almost three times the forecast. Markets fell on the news.  

    Yet this time, markets rallied, suggesting that the worry gripping traders is one of recession, not inflation. A strong jobs market increases the probability that the U.S. economy can tame inflation without contracting too severely.

    Indeed, there are signs the U.S. economy has been slowing. At the end of April, we learned that GDP rose at an annualized 1.1% pace in the first quarter, about half of what analysts had estimated. The banking crisis — resurrected by First Republic’s failure — is spreading again, causing banks to lend less and ultimately slow growth even further.

    There’s good news on that front, however. On Friday, banking titan JPMorgan Chase upgraded three regional bank stocks to “overweight,” saying that Western Alliance, Zions Bancorp and Comerica were all “substantially mispriced” — as I had argued in Friday’s edition of this newsletter.

    Investors digested the note and pushed the SPDR S&P Regional Banking ETF (KRE) up 6.3%. Individual bank stocks saw more drastic jumps: PacWest surged 81.7% and Western Alliance popped 49.2%.

    But make no mistake: This isn’t a sign that banking fears have been put to rest definitively. If stocks can swing so drastically in one direction on the back of a note, they can do so in the other at the faintest whisper of trouble. What we’re seeing isn’t renewed confidence, but continued volatility.

    Subscribe here to get this report sent directly to your inbox each morning before markets open.

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  • PacWest stock jumps 80% as regional banks rebound on Friday, but still down sharply for the week

    PacWest stock jumps 80% as regional banks rebound on Friday, but still down sharply for the week

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    Traders work on the floor of the New York Stock Exchange (NYSE), May 3, 2023.

    Brendan McDermid | Reuters

    Stock Chart IconStock chart icon

    PacWest’s stock was rebounding on Friday.

    However, Friday’s rally made only a small dent in the week-to-date losses. PacWest still finished the week down 43% and below its closing level from Wednesday. The bank confirmed this week that it is exploring strategic options.

    Western Alliance, which said it is not seeking a sale, has also been under heavy pressure this week, falling 27% even after Friday’s rally. The KRE finished the week down about 10%.

    The steep declines, which came even at banks that reported much smaller deposit outflows than First Republic, led Wall Street analysts to warn that the stocks have become detached from their fundamentals.

    “We are arguably reaching a point of hysteria,” Fundstrat strategist Tom Lee said in a note to clients on Friday.

    Analysts at JPMorgan Chase upgraded Western Alliance, Zions and Comerica to overweight on Friday, saying the bank stocks “appear substantially mispriced to us.”

    This week’s slide came after First Republic was seized by regulators and sold to JPMorgan Chase before the market opened on Monday. JPMorgan CEO Jamie Dimon and Federal Reserve Chair Jerome Powell, among others, have said this week that they think the stage of banking crisis caused by deposit outflows is largely over, but the fall for the stocks shows investors are less confident.

    Many on Wall Street are looking to Washington for regulatory changes to calm the banking system, such as potentially expanding deposit insurance rules. Some have raised the possibility of temporarily banning short-selling on bank stocks. Former Federal Deposit Insurance Corporation Chair Sheila Bair told CNBC’s “The Exchange” on Thursday that some of the share price declines are likely being driven by short-selling.

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  • JPMorgan upgrades 3 regional bank stocks to ‘buy’ in bold move against short sellers

    JPMorgan upgrades 3 regional bank stocks to ‘buy’ in bold move against short sellers

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  • CNBC Daily Open: Trading on fear, not fundamentals

    CNBC Daily Open: Trading on fear, not fundamentals

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    A Pacific Western Bank branch in Los Angeles, California, US, on Friday, March 10, 2023.

    Eric Thayer | Bloomberg | Getty Images

    This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

    U.S. regional banks continued falling Thursday even though their deposits have been increasing.

    What you need to know today

    • Apple reported a 3% year-over-year drop in both revenue and net income to $94.84 billion and $24.16 billion, respectively, for the quarter ended April 1. Both numbers, however, beat Wall Street expectations, buoyed by growth in iPhone sales. CEO Tim Cook is optimistic about Apple’s prospects in Asia, and the company’s shares rose 2.3% in extended trading.
    • Markets in the U.S. traded lower Thursday, with all major indexes ending the day in the red — though futures ticked up following the release of Apple’s earnings after the bell. Asia-Pacific stocks traded mixed Friday. Hong Kong’s Hang Seng Index led gains in the region, rising 0.6%, as its IPO market shows signs of life — albeit weak ones (more on that below).

    The bottom line

    Fears of fragility in the U.S. banking sector are spreading.

    Regional bank stocks continued tumbling Thursday; shares of PacWest and Western Alliance were halted more than once. The SPDR S&P Regional Bank ETF (KRE) fell 5.5%. At one point on Thursday, every stock in the KRE traded lower as investors sold off regional banks.

    It’s not just investors who are worried about banks’ health. Consumers — many of whom do not trade stocks — share the same sentiment. A Gallup survey found that half of respondents polled were “very worried” or “moderately worried” about the safety of their bank deposits — a proportion last seen during the 2008 financial crisis.

    Against such a backdrop — and fresh off a quarter percentage point rate hike by the Federal Reserve on Wednesday — markets, unsurprisingly, didn’t do well. The Dow slid 0.86%, the S&P 500 lost 0.72% and the Nasdaq fell 0.49%. That’s the fourth consecutive day all major indexes fell.

    But some analysts and bankers think the tumult is caused by fear more than analysis. (Though this is not to argue against the idea markets are, largely, driven by psychology.)

    Evercore ISI’s John Pancari, for instance, wrote the advisory firm is confident about the “liquidity and capital levels at banks post 1Q.” Indeed, PacWest said its deposits grew $1.8 billion from March 20 to April 24; Western Alliance also reported that its deposits have increased since the end of March.

    But Pancari warned bank valuations could still collapse because of a “self-fulfilling prophecy,” where investors, fearing the collapse of banks, actually trigger the process as they flee.

    Or, as Peter McGratty, head of U.S. bank research at KBW, put it, “We’re in this situation that feels a lot like March, where we’re trading stocks on fear … not fundamentals.” And that’s particularly scary today, when SVB’s failure in March showed how fears can spread near instantly on social media and cause a bank to collapse in merely 36 hours.

    Subscribe here to get this report sent directly to your inbox each morning before markets open.

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  • CNBC Daily Open: Fear, not fundamentals

    CNBC Daily Open: Fear, not fundamentals

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    A “For Lease” sign at a Pacific Western Bank branch in Los Angeles, California, US, on Friday, March 10, 2023.

    Eric Thayer | Bloomberg | Getty Images

    This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

    U.S. regional banks continued falling Thursday even though their deposits have been increasing.

    What you need to know today

    • Apple reported a 3% year-over-year drop in both revenue and net income to $94.84 billion and $24.16 billion, respectively, for the quarter ended April 1. Both numbers, however, beat Wall Street expectations, buoyed by growth in iPhone sales. CEO Tim Cook is optimistic about Apple’s prospects in Asia, and the company’s shares rose 2.3% in extended trading.
    • Markets in the U.S. traded lower Thursday, with all major indexes ending the day in the red — though futures ticked up following the release of Apple’s earnings after the bell. Europe’s Stoxx 600 index lost 0.5% after the European Central Bank raised interest rates (more on that below).

    The bottom line

    Fears of fragility in the U.S. banking sector are spreading.

    Regional bank stocks continued tumbling Thursday; shares of PacWest and Western Alliance were halted more than once. The SPDR S&P Regional Bank ETF (KRE) fell 5.5%. At one point on Thursday, every stock in the KRE traded lower as investors sold off regional banks.

    It’s not just investors who are worried about banks’ health. Consumers — many of whom do not trade stocks — share the same sentiment. A Gallup survey found that half of respondents polled were “very worried” or “moderately worried” about the safety of their bank deposits — a proportion last seen during the 2008 financial crisis.

    Against such a backdrop — and fresh off a quarter percentage point rate hike by the Federal Reserve on Wednesday — markets, unsurprisingly, didn’t do well. The Dow slid 0.86%, the S&P 500 lost 0.72% and the Nasdaq fell 0.49%. That’s the fourth consecutive day all major indexes fell.

    But some analysts and bankers think the tumult is caused by fear more than analysis. (Though this is not to argue against the idea markets are, largely, driven by psychology.)

    Evercore ISI’s John Pancari, for instance, wrote the advisory firm is confident about the “liquidity and capital levels at banks post 1Q.” Indeed, PacWest said its deposits grew $1.8 billion from March 20 to April 24; Western Alliance also reported that its deposits have increased since the end of March.

    But Pancari warned bank valuations could still collapse because of a “self-fulfilling prophecy,” where investors, fearing the collapse of banks, actually trigger the process as they flee.

    Or, as Peter McGratty, head of U.S. bank research at KBW, put it, “We’re in this situation that feels a lot like March, where we’re trading stocks on fear … not fundamentals.” And that’s particularly scary today, when SVB’s failure in March showed how fears can spread near instantly on social media and cause a bank to collapse in merely 36 hours.

    Subscribe here to get this report sent directly to your inbox each morning before markets open.

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  • Analysts warn regional bank stocks are in a ‘negative feedback loop’ and detached from fundamentals

    Analysts warn regional bank stocks are in a ‘negative feedback loop’ and detached from fundamentals

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  • PacWest and Other Regional Bank Stocks Fall Further

    PacWest and Other Regional Bank Stocks Fall Further

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  • PacWest falls more than 20% as regional bank stocks slide to new lows

    PacWest falls more than 20% as regional bank stocks slide to new lows

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    A Pacific Western Bank branch in Los Angeles, California, US, on Friday, March 10, 2023.

    Eric Thayer | Bloomberg | Getty Images

    Regional bank stocks fell sharply Tuesday as the fallout from the third major bank failure this year continued to put pressure on the sector.

    Shares of PacWest fell nearly 28% on Tuesday and was on track for its fourth-straight negative session. The stock was halted for volatility multiple times.

    Stock Chart IconStock chart icon

    PacWest’s stock fell again on Tuesday.

    The California-based bank was not the only regional lender under pressure. Shares of Western Alliance dropped 15%. The SPDR S&P Regional Banking ETF (KRE) sank 6.3%.

    The steep declines deepened losses in the sector from Monday. Over the weekend, regulators seized troubled regional bank First Republic and sold it to JPMorgan Chase.

    First Republic is the third failure of a large regional bank this year, following Silicon Valley Bank and Signature Bank in March.

    The reasons for Tuesday’s declines were not immediately clear. JPMorgan Chase CEO Jamie Dimon said Monday that the initial phase of the regional bank crisis was “over,” and there was cautious optimism among Wall Street analysts that the deposit flight issues had been contained.

    First Republic reported a decline in deposits of about 40% during the first quarter, raising questions about how the bank could survive on its own.

    Most other regional banks reported smaller deposits declines, however, and some, such as PacWest, reported that deposits began rebounding in late March.

    The recent bank failures and expected regulatory changes in response to them have also raised questions about the long-term profit outlooks for mid-sized regional banks.

    “We believe that banks with assets >$500B and <$60B are the clearest winners in the new world order, while there is likely to be a no-man’s land between $80-120B, as banks in this range may need to shrink to avoid new regulations or more actively engage in M&A to increase scale and absorb regulatory costs,” KBW analyst David Konrad said in a note to clients Sunday.

    Another issue for the regional banks is the possibility of more Fed rate hikes. Higher rates will make it more costly for the banks to hold on to their deposits while also lowering the market value of the long-dated bonds and loans on their books.

    Concern about the market value of those assets was one of the sparks for the initial run on Silicon Valley Bank in March.

    The central bank is expected to raise its benchmark rate by 0.25 percentage points Wednesday.

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  • CNBC Daily Open: Big Tech surpasses expectations

    CNBC Daily Open: Big Tech surpasses expectations

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    A Google Cloud logo at the Hannover Messe industrial technology fair in Hanover, Germany, on Thursday, April 20, 2023.

    Krisztian Bocsi | Bloomberg | Getty Images

    This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

    Bank stocks fell as First Republic reignited fears. Meanwhile, Alphabet and Microsoft beat earnings estimates, giving markets a chance to rally around tech.

    What you need to know today

    • Microsoft’s revenue increased 7% year over year to $52.86 billion, and its net income rose 9% to $18.3 billion for the quarter ended March 31. Both top and bottom line numbers beat expectations, causing shares to surge 8.45% in overnight trading.

    The bottom line

    Can optimism in tech save markets from resurgent bank fears?

    Investors must have felt an unwelcome sense of déjà vu. First Republic lost almost half its value in a single trading day, dragging down other regional banks. Western Alliance Bancorp lost 5.58%, Charles Schwab fell 3.93% and PacWest Bancorp sank 8.92% (though the Los Angeles-based bank managed to recoup its losses in overnight trading after reporting its earnings).

    Bigger banks weren’t spared, either: The broader SPDR S&P Bank ETF lost 3.68%. Across the Atlantic, UBS shares dropped even though the Swiss bank managed to increase assets in March, suggesting investors are still jumpy at any sign of weakness in banks.

    Losses in the financial sector weighed on major stock indexes. The Dow Jones Industrial Average slid 1.02%, the S&P 500 ended the day 1.58% lower and the Nasdaq Composite lost 1.98%.

    However, Wednesday could look like a very different trading day in the United States. Investors were pleased with how both Alphabet and Microsoft managed to beat estimates on profit and revenue. Shares of those tech giants popped in extended trading and are likely to post more dramatic surges later today. Given Alphabet’s and Microsoft’s immense market capitalization, broader markets stand to benefit from their rise as well.

    If Meta, which is due to report after the bell Wednesday, continues the streak of big tech surpassing Wall Street’s expectations, investors could be in for two good trading days for the Nasdaq, at the very least. That could be enough to banish any lingering sense of déjà vu surrounding banks.

    Subscribe here to get this report sent directly to your inbox each morning before markets open.

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  • CNBC Daily Open: Big Tech beats expectations

    CNBC Daily Open: Big Tech beats expectations

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    A sign reading “I’m Feeling Lucky” outside the Google Inc. regional headquarters in Paris, France, on Thursday, April 6, 2023.

    Nathan Laine | Bloomberg | Getty Images

    This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

    Bank stocks fell as First Republic reignited fears. Meanwhile, Alphabet and Microsoft beat earnings estimates, giving markets a chance to rally around tech.

    What you need to know today

    • Microsoft’s revenue increased 7% year over year to $52.86 billion, and its net income rose 9% to $18.3 billion for the quarter ended March 31. Both top and bottom line numbers beat expectations, causing shares to surge 9% in overnight trading.
    • Turning to banks, UBS’ first-quarter profit fell 52% year on year to $1.03 billion, largely because of a $665 million provision it had to make for litigation related to mortgage-backed securities the bank sold almost 20 years ago. However, the bank’s wealth management unit attracted $28 billion amid the banking turmoil in March. Still, that news couldn’t stop shares from sliding 2.17%.
    • First Republic Bank fared worse. On Monday, the U.S. bank reported after markets closed that its deposits sank 40.8%; on Tuesday, traders fled the stock, causing it plummet 49.38% to hit a record low.
    • PRO Artificial intelligence-focused stocks are set for a period of extreme growth, according to Adam Parker, founder and CEO of Trivariate Research and previously Morgan Stanley’s chief U.S. equity strategist. Here are 25 stocks that can capitalize on the A.I. boom, with 15 of them up 20% year to date.

    The bottom line

    Can optimism in tech save markets from resurgent bank fears?

    Investors must have felt an unwelcome sense of déjà vu. First Republic lost almost half its value in a single trading day, dragging down other regional banks. Western Alliance Bancorp lost 5.58%, Charles Schwab fell 3.93% and PacWest Bancorp sank 8.92% (though the Los Angeles-based bank managed to recoup its losses in overnight trading after reporting its earnings).

    Bigger banks weren’t spared, either: The broader SPDR S&P Bank ETF lost 3.68%. Across the Atlantic, UBS shares dropped even though the Swiss bank managed to increase assets in March, suggesting investors are still jumpy at any sign of weakness in banks.

    Losses in the financial sector weighed on major stock indexes. The Dow Jones Industrial Average slid 1.02%, the S&P 500 ended the day 1.58% lower and the Nasdaq Composite lost 1.98%.

    However, Wednesday could look like a very different trading day in the United States. Investors were pleased with how both Alphabet and Microsoft managed to beat estimates on profit and revenue. Shares of those tech giants popped in extended trading and are likely to post more dramatic surges later today. Given Alphabet’s and Microsoft’s immense market capitalization, broader markets stand to benefit from their rise as well.

    If Meta, which is due to report after the bell Wednesday, continues the streak of big tech surpassing Wall Street’s expectations, investors could be in for two good trading days for the Nasdaq, at the very least. That could be enough to banish any lingering sense of déjà vu surrounding banks.

    Subscribe here to get this report sent directly to your inbox each morning before markets open.

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  • Moody’s Downgrades 11 Regional Banks, Including Zions, U.S. Bank, Western Alliance

    Moody’s Downgrades 11 Regional Banks, Including Zions, U.S. Bank, Western Alliance

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    Moody’s Downgrades 11 Regional Banks, Including Zions, U.S. Bank, Western Alliance

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  • Wells Fargo loves these three regional banks and thinks one will rally 50%

    Wells Fargo loves these three regional banks and thinks one will rally 50%

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  • Wells Fargo says this regional bank stock that got caught up in crisis should rebound by 60%

    Wells Fargo says this regional bank stock that got caught up in crisis should rebound by 60%

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  • Regional bank reports so far show deposits are stabilizing. What’s next for the stocks

    Regional bank reports so far show deposits are stabilizing. What’s next for the stocks

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  • Federal judge suspends FDA abortion pill approval, gives Biden administration time to appeal

    Federal judge suspends FDA abortion pill approval, gives Biden administration time to appeal

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    Abortion rights advocates gather in front of the J Marvin Jones Federal Building and Courthouse in Amarillo, Texas, on March 15, 2023.

    Moises Avila | AFP | Getty Images

    A federal judge in Texas on Friday suspended the Food and Drug Administration’s approval of the abortion pill mifepristone nationwide, but delayed the ruling from taking effect for a week to give the Biden administration time to appeal.

    But minutes after the Texas decision was announced, a federal judge in Washington state issued a preliminary injunction that said essentially the opposite.

    The seemingly conflicting federal court rulings out of Texas and Washington state means the Supreme Court may ultimately weigh in on the legality of mifepristone in the U.S., which was approved by the FDA more than two decades ago in 2000.

    Used in combination with another drug called misoprostol, mifepristone is the most common method to terminate a pregnancy in the U.S., accounting for about half of all abortions. 

    U.S. Judge Matthew Kacsmaryk of the U.S. Northern District of Texas held a key hearing in the case weeks ago in Amarillo, but the news of the decision that could upend access to the key abortion drug only came down late on a Friday when many Americans were off for religious observances.

    Kacsmaryk endorsed nearly all of the plaintiffs’ arguments about their right to sue, which called for the removal of the FDA’s approval of the drug. He argued mifepristone has serious safety issues, sidelining the FDA’s long-standing determination that the drug is safe and effective.

    “The Court does not second-guess FDA’s decision-making lightly,” Kacsmaryk wrote. “But here, FDA acquiesced on its legitimate safety concerns — in violation of its statutory duty — based on plainly unsound reasoning and studies that did not support its conclusions.” 

    But in a dramatic turn, Judge Thomas Owen Rice of the U.S. District for the Eastern District of Washington essentially countered the Texas decision, when he barred the FDA from “altering the status quo and rights as it relates to the availability of mifepristone” in the 17 states and D.C. that sued to keep pill on the market there.

    Boxes of the medication Mifepristone used to induce a medical abortion are prepared for patients at Planned Parenthood health center in Birmingham, Alabama, March 14, 2022.

    Evelyn Hockstein | Reuters

    U.S. Attorney General Merrick Garland said Kacsmaryk’s ruling in Texas “overturns the FDA’s expert judgment, rendered over two decades ago, that mifepristone is safe and effective.” Garland said the Justice Department will appeal the Texas ruling and defend the FDA approval.

    The case will go to the U.S. 5th Circuit Court of Appeals. If the Biden administration fails to convince that court to overturn Kacsmaryk’s ruling, access to mifepristone would be in jeopardy across the U.S.

    But the ruling out of Washington state may protect access at least in Arizona, Colorado, Connecticut, Delaware, Illinois, Michigan, Nevada, New Mexico, Oregon, Rhode Island, Vermont, Hawaii, Maine, Maryland, Minnesota, Pennsylvania, Washington state and D.C.

    Kacsmaryk’s decision will not affect access to misoprostol, which is commonly used as a standalone abortion drug in other parts of the world. Some abortion providers have said they plan to use misoprostol as an alternative to the two-drug regimen if mifepristone is pulled from the market.

    How it started

    A coalition of physicians opposed to abortion, called the Alliance for Hippocratic Medicine, sued the FDA in November over its approval of mifepristone. The group argued that the FDA abused its authority by approving mifepristone through an accelerated process for new drugs that help patients with serious or life-threatening illnesses more than what is otherwise available on the market.

    Kacsmaryk embraced the group’s claims Friday, arguing that pregnancy is not an illness and mifepristone does not provide a meaningful therapeutic benefit over surgical abortion.

    The anti-abortion physicians were represented by attorneys from the Alliance Defending Freedom, an organization that worked with Mississippi lawmakers to draft the law at the center of Dobbs v. Jackson Women’s Health Organization. That case ultimately resulted in the Supreme Court overturning Roe v. Wade.

    Kacsmaryk joined the court in 2019 after his appointment by former President Donald Trump. Kacsmaryk’s nomination was unanimously opposed by Senate Democrats as well as Republican Susan Collins of Maine, who supports abortion rights.

    His nomination was also opposed by abortion and LGBTQ rights organizations such as Planned Parenthood and the Human Rights Campaign.

    The FDA called the case “extraordinary and unprecedented” in its January response to the lawsuit. The agency’s lawyers said they could not find any previous example of a court second-guessing an FDA decision to approve a drug.

    The agency also said mifepristone was not approved under an accelerated pathway. It took more than four years from the filing of the initial application until the pill was approved.

    The FDA approved mifepristone as a safe and effective method to terminate an early pregnancy based on extensive scientific evidence, the agency’s lawyers wrote. Decades of experience among thousands of women have confirmed that the drug regimen is the safest option for many patients compared with surgical abortion or childbirth, the lawyers argued.

    The FDA warned that pulling mifepristone from the U.S. market would put the health of women at risk if they cannot get access to the pill to safely end pregnancies. It would also weaken the FDA’s federal drug approval powers and hinder drug development by creating regulatory uncertainty in the marketplace, the government’s lawyers have said.

    “If longstanding FDA drug approvals were so easily enjoined, even decades after being issued, pharmaceutical companies would be unable to confidently rely on FDA approval decisions to develop the pharmaceutical-drug infrastructure that Americans depend on to treat a variety of health conditions,” the Biden administration lawyers wrote.

    Mifepristone has been subject to FDA restrictions since its approval in 2000 to monitor the pill’s safety and efficacy. These restrictions have been subject to criticism and litigation from medical associations such as the American College of Obstetricians and Gynecologists and more recently from attorneys general in Democratic- led states

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    The FDA has gradually eased the restrictions on mifepristone over the years as more evidence has come in. The agency dropped previous rules that required in-person visits with medical professionals, allowing the pill’s delivery by mail. The FDA recently allowed certified retail pharmacies to dispense mifepristone when the patient has a prescription from a health-care provider that’s approved under the agency’s monitoring program.

    Misoprostol, the drug that’s used with mifepristone, is recommended as a stand-alone method to terminate a pregnancy by the World Health Organization. But the FDA has not approved misoprostol as an abortion medication on its own.

    The American College of Obstetricians and Gynecologists recommends misoprostol as an alternative for early abortions if mifepristone is not available, though it’s not as effective as the two-drug regimen, according to the organization.

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  • UBS sees a rally in these bank stocks ahead as bank crisis appears contained

    UBS sees a rally in these bank stocks ahead as bank crisis appears contained

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  • First Republic shares slid almost 33% after deposit infusion, dragging down other regional banks

    First Republic shares slid almost 33% after deposit infusion, dragging down other regional banks

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    People are seen inside the First Republic Bank branch in Midtown Manhattan in New York City, New York, U.S., March 13, 2023. REUTERS/Mike Segar

    Mike Segar | Reuters

    Shares of First Republic were under severe pressure Friday despite the beaten-down regional bank receiving aid from other financial institutions the day before.

    At the market close, the stock was down 32.8%, the worst performer in the SPDR S&P Regional Banking ETF (KRE) — which dropped 6.0%. PacWest lost 19% and Western Alliance dropped 15%, while US Bancorp declined more than 9%.

    Those losses came even after 11 other banks pledged to deposit $30 billion in First Republic as a vote of confidence in the company.

    “This action by America’s largest banks reflects their confidence in First Republic and in banks of all sizes, and it demonstrates their overall commitment to helping banks serve their customers and communities,” the group, which included Goldman Sachs, Morgan Stanley and Citigroup, said in a statement.

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    First Republic Bank continued to crater on Friday.

    There were concerns that Thursday’s deposit infusion may still not be enough to shore up First Republic in the future.

    Atlantic Equities downgraded First Republic to neutral, noting the bank may need an additional $5 billion in capital. 

    “Management is exploring different strategic options which may include a full sale or divestments of parts of the loan portfolio. The limited information provided implies that the balance sheet has increased substantially, which may well necessitate a capital raise,” analyst John Heagerty wrote.

    Meanwhile, Wedbush analysts put a $5 price target on First Republic, saying that a takeover could wipe out most of its equity value.

    “A distressed M&A sale could result in minimal, if any, residual value to common equity holders owing to FRC’s significant negative tangible book value after taking into account fair value marks on its loans and securities.”

    Late Friday, after the stock market closed, the New York Times reported that First Republic was in talks to raise capital by selling shares to other unnamed banks or private equity firms in a private sale. Terms of the deal, as to the price of the shares, how many and to whom, were still under discussion, and it was also possible that the entire bank might be sold, the Times said.

    — CNBC’s Michael Bloom and Scott Schnipper contributed to this report.

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  • U.S. stocks end lower, Dow books back-to-back weekly losses as banking sector stress reemerges

    U.S. stocks end lower, Dow books back-to-back weekly losses as banking sector stress reemerges

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    U.S. stocks ended lower Friday as worries about banking-sector stability reemerged following a bankruptcy filing by SVB Financial Group and the release of data showing banks borrowed $165 billion from the Federal Reserve over the past week.

    How stocks traded
    • The Dow Jones Industrial Average
      DJIA,
      -1.19%

      fell 384.57 points, or 1.2%, to close at 31,861.98.

    • The S&P 500
      SPX,
      -1.10%

      dropped 43.64 points, or 1.1%, to finish at 3,916.64.

    • The Nasdaq Composite
      COMP,
      -0.74%

      slid 86.76 points, or 0.7%, to end at 11,630.51, snapping a four-day win streak.

    For the week, the Dow fell 0.1%, the S&P 500 gained 1.4% and the Nasdaq climbed 4.4%, according to Dow Jones Market Data. The Dow booked back-to-back weekly losses while the Nasdaq saw its biggest weekly percentage gain since January.

    What drove markets

    U.S. stocks fell Friday as worries about the banking sector persisted.

    “The markets are up and down all this week, and they’re moving typically in big amounts, because there really isn’t any consensus on how the strains in the banking system will play” into the economy, said Paul Christopher, head of global investment strategy at Wells Fargo Investment Institute, in a phone interview Friday. Investors are trying to get a sense for how quickly the economy may be slowing and whether the problems in the banking sector will lead to an “accelerated slowing,” he said.

    Concerns about the banking sector’s ability to withstand deposit flight reemerged Friday morning after SVB Financial Group
    SIVB,
    -60.41%

    announced it had filed for Chapter 11 bankruptcy protection. SVB is the holding company of Silicon Valley Bank , which was put into FDIC receivership last Friday.

    On Thursday, First Republic Bank announced that it would receive $30 billion of uninsured deposits from a group of large U.S. banks. JPMorgan Chase & Co., Citigroup Inc., Bank of America Corp. and Wells Fargo & Co. were among the 11 banks that agreed to provide the deposits.

    Meanwhile, Federal Reserve data released Thursday afternoon in New York showed banks borrowed a combined $165 billion from the central bank. Most of the borrowing occurred via the Fed’s discount window. But a small amount was also tapped through the Fed’s new Bank Term Funding Program that allows bonds trading at a discount to be used as collateral, at par value. The fact that borrowing through the discount window has soared to a record high was adding to the market’s concerns about the banking sector, analysts said.

    See: Banks have borrowed $165 billion from the Fed in past week after SVB failure

    First Republic Bank
    FRC,
    -32.80%

    shares plunged 32.8% Friday, while Credit Suisse Group
    CS,
    -6.94%
    ,
    which earlier this week got a lifeline from the Swiss National Bank, closed 6.9% lower, according to FactSet data.

    At least four major banks have put restrictions on trades that involve troubled Swiss lender Credit Suisse Group or its securities, Reuters reported Friday, citing people with direct knowledge of the matter.

    “I think there are still a lot of questions right now,” said Mark Luschini, chief investment strategist at Janney, during a phone interview with MarketWatch. “Investors can’t seem to hold their enthusiasm for equities for longer than a 24-hour news cycle.”

    It’s not hard to understand why investors are still so anxious about the banking sector given the surge in borrowing from the Fed, said Matt Maley, chief market strategist at Miller Tabak + Co.

    “Given that banks borrowed over $150bn at the Fed’s discount window on Wednesday, which compares to $4.4bn the week before, one can understand why investors are worried that the situation might be a bit more dire than the authorities are admitting to right now,” Maley said in emailed commentary.

    In economic news, the Conference Board said Friday that the U.S. leading economic index fell 0.3% in February, marking the 11th straight monthly decline. U.S. industrial production was flat in February, data released Friday by the Fed show.

    Meanwhile, the University of Michigan’s latest reading on consumer sentiment showed consumers were more downbeat in March than at ay time in the last four months.

    While stocks fell Friday, they finished the week mostly higher. The Dow Jones Industrial Average slipped 0.1% for the week, while the S&P 500 booked a 1.4% weekly gain and the technology-heavy Nasdaq Composite saw a weekly rise of 4.4%, according to Dow Jones Market Data.

    Companies in focus
    • FedEx Corp.’s stock 
      FDX,
      +7.97%

       jumped 8% after beating analyst estimates in its fiscal third-quarter earnings. The shipping firm also lifted its profit forecast for the full fiscal year.

    • Shares of PacWest Bancorp 
      PACW,
      -18.95%

      and Western Alliance Bancorp 
      WAL,
      -15.14%

      tumbled as regional banks continued to face pressure, with PacWest falling almost 19% and Western Alliance dropping 15.1%.

    • Shares of Microsoft Corp.
      MSFT,
      +1.17%

      rose 1.2% as analysts saw the latest iteration of Chat GPT giving the tech giant an even greater edge. In other megacap tech names, Alphabet Inc.’s Class A
      GOOGL,
      +1.30%

      shares gained 1.3% while semiconductor giant Nvidia Corp.
      NVDA,
      +0.72%

      advanced 0.7%.

    —Steve Goldstein contributed to this report.

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