Wall Street bounces as banks rise on SVB deal
Main U.S. indexes advance: DJI up ~0.6%
Financials lead S&P 500 sector gainers; real estate weakest
Euro STOXX 600 index up ~1.2
Dollar slips; gold, bitcoin decline; crude up ~25
U.S. 10-Year Treasury yield jumps to ~3.49%
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WALL STREET BOUNCES AS BANKS RISE ON SVB DEAL (1015 EDT/1415 GMT)
Wall Street is rallying early on Monday after First Citizens BancShares Inc FCNCA.O said it would acquire the deposits and loans of failed Silicon Valley Bank, a deal that eased some worries about the banking crisis.
Under the deal, unit First–Citizens Bank & Trust Company will assume SVB assets of $110 billion, deposits of $56 billion and loans of $72 billion.
Financials .SPSY are leading in the early going, up 1.22%, with real estate .SPLRCR one of two decliners among the 11 S&P 500 sectors, down 0.25%.
Small caps .RUT and transports .DJT are gaining, while value .IVX is outpacing gains in growth .IGX.
JPMorgan Chase & Co JPM.N, Bank of America Corp BAC.N and Wells Fargo & Co WFC.N are among the top contributers to the surge, rising 1.57%, 3.56% and 3.37%, respectively.
The KBW Bank index .BKX is up 2.60%, while in Europe the STXE 600 banks index .SX7P is gaining 1.55%.
All eyes now will be on the Federal Reserve's weekly H.8 data on the assets and liabilities of commercial banks, which will be released after the bell on Friday.
Here is a snapshot of where markets stood a little more than 30 minutes into the trading day:
(Herbert Lash)
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CHIP STOCKS AMONG 2023'S GOLDEN BOYS (0900 EDT/1300 GMT)
Chip stocks have shined brightly this year.
The Philadelphia SE Semiconductor index .SOX is up a little more than 23% so far this year versus a 17.5% rise for the broader technology sector .SPLRCT, a 13% rise for the Nasdaq Composite .IXIC, and a 3.4% gain for the benchmark S&P 500 index .SPX.
Last week, the SOX thrust to its highest level in nearly a year. This, after the index used the former neckline of an inverse head & shoulders bottom as support:
After losing nearly half its value from its January 2022 high to its October trough, the SOX this January completed an inverse head & shoulders, which is a bullish reversal pattern, with a neckline breakout.
Frequently, once price exceeds the neckline traders will look for a retracement back toward this line, where it will then act as support. Upon a successful test of the support, the developing advance will resume.
The March 23 high at 3,216.322 is now resistance, while the broken neckline is support around 2,815.
The inverse head & shoulders minimum pattern projection still calls for an eventual return to levels in excess of 3,800. Such a rally would put the SOX within striking distance of its intraday peak of 4,068 set Jan. 4, 2022.
Coming back under the former neckline can suggest risk the pattern is failing.
Meanwhile, 27 of the 30 SOX members are higher year-to-date. But, of note, nine of the top 10 gainers are chipmakers as compared to equipment makers:
That said, since early March, the chipmaker/equipment maker ratio has been caught in a range. A range breakdown may signal a more sustained shift back in favor of equipment makers.
(Terence Gabriel)
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FOR MONDAY'S LIVE MARKETS POSTS PRIOR TO 0900 EDT/1300 GMT - CLICK HERE
SOX03272023https://tmsnrt.rs/3z6xSlU
ChipVeqip03272023https://tmsnrt.rs/3JMVPUb
Early market snapshothttps://tmsnrt.rs/3Klk3qh
(Terence Gabriel is a Reuters market analyst. The views expressed are his own)
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