The S&P 500 declined 0.8% last week, yet that almost felt like a gain when Friday’s session ended considering the S&P 500 was down 2.6% for the week going into Friday.
A pleasing earnings report from Apple (AAPL) that translated into a 4.7% gain for the market’s most heavily-weighted stock, a needed rebound in the regional bank stocks, and an April employment report that kept soft-landing hopes alive were the catalysts for the comeback effort.
That effort has carried over today, although it is more reserved than it was on Friday. Currently, the S&P 500 futures are up six points and are trading 0.1% above fair value, the Nasdaq 100 futures are down 22 points and are trading 0.2% below fair value, and the Dow Jones Industrial Average futures are up 82 points and are trading 0.3% above fair value.
Strikingly, PacWest Bancorp (PACW) said it is going to cut its quarterly dividend to $0.01 per share from $0.25, yet its stock is up 33.5% in pre-market trading. That response is setting the tone so to speak for other bank stocks seeing that PACW is up sharply despite what is otherwise bad news for shareholders.
The SDPR S&P Regional Banking ETF (KRE) is up 2.7% in pre-market trading after rallying 6.3% on Friday.
The uplift here is providing some support for the broader market, whereas some softness in the mega-cap stocks is keeping things in check along with some hesitation in front of the 2:00 p.m. ET release of the Senior Laon Officer Opinion Survey (SLOOS).
The latter will be looked at closely for indications of credit tightening activity by banks that will weigh on economic growth. This important report will be followed later in the week by the April Consumer Price Index (CPI), which is set for release on Wednesday.
That CPI data will help drive expectations for the June FOMC meeting. On a related note, Chicago Fed President Goolsbee (FOMC voter) said late Friday that it is still way too premature to say the Fed will raises rates again in June, according to Reuters.
Treasury Secretary Yellen, meanwhile, said over the weekend that it would be “economic chaos” if the debt ceiling was not raised. President Biden will be meeting with House Speaker McCarthy and other Congressional leaders on Tuesday to discuss the debt ceiling.
Both sides thus far seem pretty entrenched with their positions: Republicans wanting an agreement on spending cuts before agreeing to a debt ceiling increase and Democrats wanting an agreement to raise the debt ceiling without any strings attached. Given that, the market is anxious to hear the tone and to read the body language of the respective leaders on the other side of that meeting.
The 1-month T-bill yield sits at 5.40% and the 3-month T-bill yield sits at 5.23%. The 2-yr note yield is up five basis points to 3.97% this morning and the 10-yr note yield is up five basis points to 3.49%.
There are a lot of moving parts in the mix for market participants to consider and the week is just getting started. Fittingly, it seems, the market is poised to start today on a mixed note.
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Originally Posted May 9, 2023 – Looking mixed amid many moving parts
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