The Wall hesitated under the collapse of the First Republic and before the Fed

Last updated 21:30

Wall Street’s main indices continued to rise in trading on Monday, but gains remained muted as investors tried to assess the coming day for US regional banks in light of the collapse of the First Republic, which eventually led to its acquisition by JPMorgan Chase.

This is the bank’s fourth collapse since March, when turmoil began in US banking institutions. Shares of First Republic Bank have been in freefall since the beginning of last week when the bank reported first-quarter results that showed huge deposit outflows of more than $70 billion.

California banking authorities announced the closure of the bank at the same time it was announced that JPMorgan Chase had agreed to acquire First Republic. The Federal Deposit Insurance Corporation (FDIC) announced that it expects to record a hit of about $13 billion.

The S&P 500 Banking Index is up 1.4% today. However, the pressure does not appear to be abating, with regional institutional stocks such as Citizens Financial Group, PNC Financial Services Group, Truist Financial Corp, and US Bancorp heading into the red. Meanwhile, the KBW Regional Banking Index fell more than 2%.

Indicators – Statistics

On the board, the Dow Jones Industrial Average rose 36.70 points, or 0.11%, to 34,134.86, while the broader S&P 500 added 7.63 points, or 0.18%, to 4,177.00. The Nasdaq Technology Index rose 6.64 points, or 0.06%, to 12,233.46 points.

Of the 30 stocks that make up the Dow Jones Industrial Average, 14 are moving with a positive sign and 16 are moving with a negative sign. The biggest gainers were JPMorgan Chase, with a jump of $3.41, or 2.47%, to $141.65, followed by Nike, with a gain of 1.03%, to $128.02, and UnitedHealth Group, up 1.02%, to $497.10.

Conversely, the biggest losers are Intel (-2.01%), Walgreens Boots Alliance (-1.57%) and American Express (-1.24%).

The developments in the banking industry come as the Federal Reserve prepares to announce another rate hike in the middle of the week as part of its battle to control inflation. Analysts expect the central bank to move on Wednesday to another 25 basis point rate hike, possibly completing the tightening cycle that began in March 2022. Since then, the Fed has raised rates by a total of 475 basis points, the most intense monetary tightening since then. . the eighties.

Later in the day, a report released today by the Institute for Supply Management (ISM) showed that the US manufacturing sector continued to contract in April, although it recovered from a three-year low the previous month.

Notably, the ISM manufacturing PMI jumped to 47.1 in April from 46.3 in March, the lowest reading since May 2020. Analysts polled by Reuters had put the index at 46.8.

This was the sixth month in a row that the index remained below the 50 level that separates expansion from contraction in manufacturing activity.

Meanwhile, a separate survey by S&P Global showed that the sector managed to move, if only marginally, into an expansionary path in April.

In particular, the S&P Global Manufacturing PMI rose to 50.2 in April from 49.2 in March versus a preliminary reading of 50.4. S&P Global said it was the first reading above 50 in the past six months and the highest since October 2022.