Benzinga - After the market mayhem seen last week, some semblance of normalcy could return to Wall Street, thanks to the government’s move to assuage concerns in response to the banking crisis. The mood is likely to remain nervous as headlines on the banking fiasco continue to drop in.
Cues From Past Week’s Trading:
Stocks wilted in the week ended March 10, as risk appetite went for a toss amid rate worries and fears concerning a contagion following the collapse of SVB Financial Group (NASDAQ: SIVB) unit Silicon Valley Bank.
All three major averages ended with weekly declines of over 5.4% each. The Dow Industrials ended the week at the lowest since Oct. 26, while the S&P 500 and Nasdaq Composite indices pulled back to two-month lows.
| Nasdaq Composite | -4.71% | 11,138.89 | |
| S&P 500 Index | -4.55% | 3,861.59 | |
| Dow Industrials | -4.44% | 31,909.64 |
Bears came out of hibernation last week after waking up to a warning shot from the banking space, said Adam Turnquist, chief technical strategist at LPL Financial.
“Technical damage was widespread as the S&P 500 violated its closely watched 200-day moving average, along with an uptrend that has been in place since October,” the analyst said. As of Friday afternoon, less than half of the S&P 500 stocks were above their 200-day moving averages compared to February’s high of 79%, he noted.
Turnquist sees the next major support area at the December lows near 3,783. A break below the level would significantly raise the odds for a retest of the October lows, he added.
Futures Today
| Nasdaq 100 Futures | +0.62% | |
| S&P 500 Futures | +0.16% | |
| Dow Futures | -0.13% | |
| R2K Futures | +0.63% |
Upcoming Economic Data:
The economic calendar of the day is light, a calm before the storm, given the slew of first-tier economic data lined up for release over the course of the week.
Check out Benzinga’s preview of the week’s economic data by following this link.
The New York Federal Reserve is scheduled to release its February survey of consumer expectations at 11 a.m. EST. The January survey showed one-year consumer inflation expectations at 5%.
The Treasury will auction 3-month and 6-month Treasury bills at 11 a.m. EST.
Stocks In Focus:
- First Republic Bank (NYSE: FRC) plunged over 55% in premarket trading after it announced it has enhanced and diversified its financial position through additional borrowing capacity from the Fed and JPMorgan.
- PacWest Bancorp. (NASDAQ: PACW) slumped over 27% despite the company putting out a press release late Friday to reassure investors.
- Meta Platforms Inc. (NASDAQ: META) climbed over 2% after a Wall Street Journal report said the company is planning to announce multiple rounds of job cuts in the coming months, with the magnitude of eliminations matching the 13% cuts announced in 2022.
- Illumina Inc. (NASDAQ: ILMN) rose over 3% on another WSJ report that corporate raider Carl Icahn is preparing to launch a proxy war with the healthcare services company.
- Cancer biotech Provention Bio Inc. (NASDAQ: PRVB) soared over 260% after it agreed to be bought by Sanofi (NASDAQ: SNY) for $2.9 billion.
First Republic Bank: Wolf Research downgrades from Outperform to Peer Perform; Raymond James downgrades from Strong Buy to Market Perform.
- Tesla Inc. (NASDAQ: TSLA): Wolf Research downgrades from Outperform to Peer Perform.
- JPMorgan Chase & Co Inc. (NYSE: JPM): Wells Fargo upgrades from Equal-Weight to Overweight and ups price target from $148 to $155.
- Eli Lilly & Co. (NYSE: LLY): Wells Fargo upgrades from Equal-Weight to Overweight and ups price target from $360 to $375.
- Amgen Inc. (NASDAQ: AMGN): Wells Fargo upgrades from Equal-Weight to Overweight and ups price target from $265 to $275.
- Merck & Co. Inc. (NYSE: MRK): Wells Fargo downgrades from Overweight to Equal-Weight and reduces price target from $120 to $115.
After Friday’s rebound, crude oil futures have turned lower yet again. A barrel of WTI-grade crude oil traded down 1.93% at $75.20.
The 10-year Treasury note fell further on Monday after dropping below 3.7% in Friday’s session amid the banking mayhem. The yield fell 0.141 percent points to 3.554%.
LPL technical analyst Turnquist said he does not attach too much significance to the sharp pullback in Treasury yields last week. “There is [a] little silver lining as the downside was largely driven by safe-haven flows related to rising recession risk and fear over the fallout from the banking sector,” he said.
The major Asian markets closed Monday’s session mixed, with the Hong Kong, Chinese, South Korean, Taiwanese and Indonesian markets ending higher, while the rest moved to the downside.
The early-opening Asian markets started sharply lower and cut their losses after the U.S. government released a statement outlining measures to mitigate the banking crisis at hand.
European stocks have turned sharply lower in late-morning trading, as traders continue to digest the fallout of the U.S. banking crisis. U.K. banking giant HSBC Holdings Plc. (NYSE: HSBC) announced it is buying the U.K. arm of SVB for £1 ($1.21) and its stock pulled back in reaction.
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