Futures fell on Monday, erasing earlier gains as traders assessed a plan to backstop all the depositors in failed Silicon Valley Bank and make additional funding available for other banks.
Market Snapshot
At 8:48 a.m. ET, Dow e-minis were down 408 points, or 1.27%, S&P 500 e-minis were down 54 points, or 1.39%, and Nasdaq 100 e-minis were down 129 points, or 1.08%.
Pre-Market Movers
First Republic— Shares of First Republic cratered more than 64% before the bell, building on last week’s losses. Shares led a decline in bank stocks despiteplans from the government to backstop depositorsof Silicon Valley Bank and Signature Bank.
Seagen— Shares soared more than 18% in early market trading on news it will be acquired byPfizerin a deal worth roughly $43 billion, which will boost Pfizer’s cancer treatment portfolio as it endures a decline in Covid-19 product sales. Pfizeroffered $229 in cashper share of Seagen, a 32.7% upside to Friday’s closing price.
Illumina— Shares of the biotech company rose 8.2% after The Wall Street Journal reported that billionaire activist Carl Icahn is preparing a proxy fight at Illumina. Icahn is arguing the company cost its shareholders about $50 billion after pushing through a risky acquisition despite facing opposition from regulators, the Journal said.
PacWest Bancorp,Western Alliance Bancorp— Regional lenders PacWest Bancorp’s shares fell by more than 40% while Western Alliance’s stock fell by more than 51%, with both banks stinging from the closure of Silicon Valley Bank and Signature Bank. In an attempt to calm investors, bothbanks said on Fridaythat their liquidity and deposits remained strong.
Bank of America,JP Morgan,Citigroup— Shares of major banks saw significant losses in early market trading, after the closure of two major banks has spread fear among investors and pushedregulators to further clamp down on risksassociated with the bank closures. Bank of America lost 4.2%, JP Morgan shed about 1.4%, and Citi was down 2.25%.
Charles Schwab— Shares declined by more than 6.6% before the bell. Citiupgraded the stock to buy from neutral, however, saying the company’s 23% decline over the last two trading days gives it a “compelling” risk-reward ratio. Citi expects near-term revenue and earnings headwinds from rising funding costs and continued client cash sorting, which it believes are already reflected in the current stock price.
PNC— Shares lost nearly 5.2% early Monday morning after the bankdecided against biddingon Silicon Valley Bank as regulators struggle to find buyers for the failed bank.
Roku— Roku’s shares fell more than 2% before the bell. The streaming and media companysaid in a Friday SEC filingthat around $487 million, or 26%, of its cash reserves are stuck at Silicon Valley Bank.
Petco Health and Wellness— Shares slipped less than 1% after the company was downgraded by Citi to neutral from buy. The Wall Street firm cited continued weakness in discretionary spending and the potential for consumers to trade down to cheaper offerings among the reasons for the call.
Market News
Pfizer Agrees to Buy Seagen for $43 Billion
Pfizer Inc (PFE.N) on Monday struck a roughly $43 billion deal for Seagen Inc (SGEN.O) to bulk up its cancer treatment portfolio, as the drugmaker braces for a steep fall in COVID-19 product sales and loss of exclusivity for some top sellers.
The deal, Pfizer's largest since its $67 billion acquisition of Wyeth in 2009, will add four approved cancer therapies with combined sales of nearly $2 billion in 2022.
HSBC to Buy Silicon Valley Bank’s UK Arm for £1 in Tech Repreive
HSBC Holdings Plc is set to buy the UK arm of Silicon Valley Bank, the culmination of a frantic weekend where ministers and bankers explored various ways to avert the SVB unit’s collapse.
The London-listed lender’s “ring-fenced subsidiary, HSBC UK Bank plc, is acquiring Silicon Valley Bank UK Limited (SVB UK) for £1,” HSBC said in a statement Monday.
Signature Bank Closed by New York Regulators in SVB’s Wake
Signature Bank was closed by New York state financial regulators on Sunday as the fallout from last week’s implosion of SVB Financial Group’s Silicon Valley Bank spreads to other lenders.
Depositors at the New York-based bank will have access to their money under “a similar systemic risk exception” to one that will allow Silicon Valley Bank clients to get their money on Monday, the Treasury Department, the Federal Reserve and the Federal Insurance Deposit Corp. said in a joint statement Sunday.
U.S. Announces It Will Stem SVB Fallout, Customers to Have Deposit Access
Silicon Valley Bank customers will have access to their deposits starting on Monday, U.S. officials said on Sunday, as the federal government announced actions to shore up deposits and stem any broader financial fallout from the sudden collapse of the tech startup-focused lender.
The boards of the Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve, in consultation with President Joe Biden, approved the FDIC's resolution of SVB, according to a joint statement from U.S. Treasury Secretary Janet Yellen, Fed Chair Jerome Powell and FDIC Chairman Martin Gruenberg on Sunday evening.