U.S. stock futures hovered around the flatline Monday after the major averages logged gains for April, and traders assessed the takeover of failed bank First Republic.
Futures tied to the Dow climbed 21 points, or 0.06%, while S&P 500 and Nasdaq-100 futures were flat.
The moves come after news that JPMorgan Chase has acquired all of troubled lender First Republic’s deposits and a “substantial majority of assets,” according to a release. JPMorgan’s shares rose 3% in premarket trading on the news.
“This takes away the uncertainty for the market,” Sarat Sethi, managing partner at DCLA, told CNBC’s “Worldwide Exchange” on Monday. “What you’ve seen now is an agreement where depositors will be taken over, and you’ve got some type of guarantee there. That’s important for the market because, you don’t want to see this kind of thing unravel.”
First Republic reported last week that deposits tumbled more than 40% in the first quarter, triggering further declines in the already struggling stock. Shares have cratered 97% since the start of the year.
The SPDR S&P Regional Banking ETF (KRE) rose about half a percent in the premarket, as investors bet the crisis that ignited in March had been contained.
Stocks are coming off a winning week and month. On Friday, the blue-chip Dow added 272 points, or 0.8%, while the S&P 500 rose 0.83%. The Nasdaq Composite advanced 0.69% as Big Tech earnings took center stage.
For the month, the Dow gained 2.5% to notch its best monthly stretch since January, while the benchmark index gained 1.5%. The tech-heavy index posted marginal gains. Earnings reports from major tech companies dominated much of last week’s market debate, fueling the narrative that earnings are faring better-than-feared, despite many widespread macroeconomic concerns.
So far, a little over half of S&P 500 companies have reported earnings, with more than 79% and about 72% surpassing earnings and sales expectations, respectively. First-quarter earnings are currently on track to fall 3.7% for the period, a smaller drop than the 6.7% decline projected on March 31, according to FactSet.
“There was definitely a very positive surprise on the big tech earnings,” said Jan Szilagyi, CEO of Toggle AI. “There was a certain trepidation going into the earnings season,” as expectations called for relative weakness.
Monday kicks off another busy week for earnings, with results from Norwegian Cruise Line and MGM Resorts. Reports from Pfizer, Starbucks, Advanced Micro Devices and CVS Health are due out later in the week.
Reports from many of these technology giants helped to lift some market confidence, he added.
In other news, investors anxiously await the latest rate hike decision from the Federal Reserve, due out Wednesday at the conclusion of the central bank’s policy meeting. As of Monday morning, about 89% of traders anticipate a 25 basis point rate hike, according to CME Group’s FedWatch tool. Wall Street will closely monitor remarks from Fed Chair Jerome Powell, offering clues into the central bank’s forward policy path.
Wall Street also awaits ISM manufacturing data, construction spending and S&P Global manufacturing PMI on Monday. April’s nonfarm payrolls report is on deck Friday.
