Banks Gain Momentum as First Citizens Acquires Silicon Valley Bank
Regional bank stocks trading higher on Monday morning included First Republic Bank, PacWest Bancorp, Western Alliance Bancorporation, Zions Bancorporation, and Regions Financial. Bank sentiment gained momentum, with JPMorgan leading the way in raising capital for First Republic Bank, which included a $30 billion cash lifeline amid the failures of regional lenders Silicon Valley Bank and Signature Bank.
First Citizens Bank announced a bold move on Monday, that it had entered into an agreement to buy all of Silicon Valley Bank’s loans and deposits, according to a Federal Deposit Insurance Corporation (FDIC) announcement. Following the acquisition, the North Carolina-based lender’s assets will nearly double, and the 17 branches that once belonged to Silicon Valley Bank will now open as First Citizens Bank branches.
Read More: Asian Stocks Drop Following Collapse of Silicon Valley Bank
Big Bank Stocks Rise and Bond Yields Bounce
Shares of First Citizens Bank rose more than 46% on Monday morning, and big bank stocks, including Bank of America, JPMorgan Chase, Wells Fargo, and Citigroup, also gained. Bond yields also saw a bounce, with the yield on the benchmark 10-year U.S. Treasury note rising to 3.5% on Monday morning. Additionally, WTI crude oil prices rose to $70 per barrel.
Volatility Ends in Gains
Last week, as predicted, was marked by volatility with the Federal Reserve raising interest rates by 0.25%, while pressures in the U.S. and European banking sectors remained in focus for investors. Deutsche Bank (DB) faced challenges after the cost of insuring the bank against a credit default spiked overnight. However, the week ended on a very positive note, with major stock market indexes all seeing gains. The Dow Jones average gained 1.2%, the S&P 500 rose 1.4%, and the Nasdaq Composite closed up 1.7%.
Economic and Earnings Outlook
On the economic front, the Conference Board’s consumer confidence measure, which provides a pulse check on the U.S. consumer, will be released on Wednesday. The most important datapoint of the week, the Fed’s preferred inflation gauge, the PCE, is set to be released on Friday. Economists are expecting personal income in February to come in at 0.3%, slightly lower than January’s read of 0.6%. Personal spending is also expected to reach 0.3%, lower than January’s reading of 1.8%.
Read More: Stock Market Need to Knows, March 2023
Will This Positive Momentum In Stock Market Continue?
The banking sector dominated headlines this week, with bank stocks gaining momentum following the announcement of First Citizens Bank’s acquisition of Silicon Valley Bank. The economic and earnings outlook for the week also played a role in the stock market’s performance, with investors closely watching consumer confidence and inflation data, as well as earnings reports from various companies.
Read More: Can AI Help You Pick Better Stocks to Buy?
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