Market Recap | Regional Banks Give Up Early Gains; Stock Indexes Little Changed
Another slide in regional-bank stocks and data showing tightening lending conditions left major stock indexes little changed on Monday.
Shares of several smaller lenders spiked early Monday, lifted by a dividend cut from PacWest Bancorp that boosted investors' confidence in its survival odds. While $PacWest(PACW)$ added around 3.7% for the day, the broader gains unwound as a volatile session wore on, leaving the KBW Nasdaq Regional Banking Index down 2.8%.
Indexes were buoyed by gains in some large technology firms. Communication-services companies led the S&P 500, boosted to a 1.3% gain by advances in shares of Meta and Alphabet. Megacap tech companies have propelled the stock market's gains this year, outperforming the broader index by 23 percentage points in 2023, according to Goldman Sachs research through Friday.
$S&P 500(.SPX)$ Buy gained less than 0.1%, while the $DJIA(.DJI)$ Sell lost 56 points, or 0.2%. The $NASDAQ(.IXIC)$ Buy added 0.2%. That was enough to push the tech-heavy index up 20% from its 2022 lows and into bull market territory. The index had endured a 143-trading-day stretch in a bear market, the longest for the Nasdaq since 2008.
The swings in regional-bank stocks came after PacWest slashed its dividend late Friday, a move that investors expect will boost its capital buffers and aided confidence in its survival odds. The stock surged as much as 30% early in the session.
Even though some banks -- such as $Western Alliance(WAL)$ Buy, which rose 0.6% -- held on to some of their early-morning rallies, analysts said a full-fledged rebound remains well away. Concerns over the lending environment and a potential recession have hammered regional-bank stocks, sending regional banks down 11% in May.
Adding to concerns about lending, the Federal Reserve's Senior Loan Officer Opinion Survey on Bank Lending Practices, released Monday afternoon, showed credit conditions continued to deteriorate in the first quarter.
Elsewhere, companies continued to post results from the first few months of the year. Shares of $Tyson Foods(TSN.US)$ slid 16% after swinging to a loss. That was the meat-maker's worst daily decline since March 2020 dragged shares to their lowest price since the onset of the Covid-19 pandemic. Meanwhile, $Six Flags Entertainment(SIX.US)$ rose 19% after reporting that spending at its amusement parks held up despite rising prices.
Investors are awaiting this week's release of the consumer-price index, slated to publish Wednesday, to see if inflation is continuing to fall in light of the Fed's decision last week to signal a pause in interest-rate increases. That will be followed by supplier inflation on Thursday.
The 2-year Treasury yield climbed to 4.009% on Monday from 3.920% Friday, when it notched its largest weekly decline since the onset of the banking tumult in mid-March, according to Tradeweb data. The yield on the 10-year note rose to 3.518% from 3.445%.
Oil prices rose, regaining some ground after wrapping up the third-consecutive weekly loss. Brent crude, the international benchmark for oil, added 2.3% to $77.01 a barrel.
Overseas, the Stoxx Europe 600 Index added 0.3%. The Japanese Nikkei index shed 0.7% and the Shanghai Composite Index advanced 1.8%.
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