Market Update
Job Openings Dropped to 2-year Low and Layoffs Jumped
Brian Turner
02 May, 2023
New York City
The number of U.S. job openings declined by 384,000 from the previous month to 9.6 million in March, the U.S. Bureau of Labor Statistics reported Tuesday.
Job openings fell by 1.6 million from the end of December.
The job openings declined to the lowest level since April 2021, indicating that tight labor market conditions may be loosening but not much.
Over the month, the number of hires and total separations were little changed at 6.1 million and 5.9 million, respectively.
Within separations, quits were 3.9 million and changed little, while layoffs and discharges increased to 1.8 million.
In March, job openings decreased in transportation, warehousing, and utilities by 144,000 but increased in educational services by 28,000.
The Federal Reserve policymakers closely watch the Job Openings and Labor Turnover Survey or JOLT survey to gauge labor market conditions.
The number and rate of layoffs and discharges increased by 248,000 to 1.8 million and 1.2%, respectively.
Layoffs and discharges increased in construction 112,000 from the previous month, accommodation and food services 63,000, and health care and social assistance 42,000.
Stocks Sour On Regional Banks, Real Estate and Recession Worries
Barry Adams
02 May, 2023
New York City
Trinity of ongoing worries about regional banks, looming U.S. government shutdown and rate path uncertainties drove market indexes lower.
Regional banking crisis remained front and center despite some investors estimating the end of the crisis after JP Morgan Chase acquired First Republic Bank.
But many investors worried that higher rates will only force banks to curtail lending and drive commercial real estate into its own crisis.
Western Alliance Bancorp dropped as much as 20%, Zions Bancorp declined 25% and PacWest Bancorp plunged 30% after investors shifted focus from First Republic to these three banks.
Rising rates are going to add more stress on balance sheets of several large and small banks, and investors are not sure how many banks have balance sheets and depositor profiles similar to failed Silicon Valley Bank and First Republic Bank.
The U.S. Federal Reserve is scheduled to announce its rate decision at the end of a 2-day policy meeting on Wednesday.
Financial markets are anticipating another 25 basis-point rate hike despite cooling of the headline inflation but core inflation has remained well anchored near 5%.
But where rates go after Wednesday's hike, has set off an intense debate on Wall Street with some investors hoping the Fed to pause for several months but few looking for the central bank to begin to lower rates near the year's end.
Moreover, multiple rate hikes have failed to cool tight labor market conditions and lowered inflation rate to the Fed's preferred level of 2% and significantly slowed economic growth.
In fact, real rates are still negative and the Fed has a long way to go in cooling inflation and easing tight labor markets.
The number of U.S. job openings declined by 384,000 to 9.6 million in March, the U.S. Bureau of Labor Statistics reported Tuesday.
The job openings fell to the lowest level since April 2021, indicating that tight labor market conditions may be loosening but not much.
Treasury Secretary Janet Yellen said that the federal government may run out of money as early as next month, stoking fears of government shutdown and disrupting normal businesses.
Lawmakers have still not agreed on government spending levels and lifted the debt ceiling level to continue the working of the federal government.
The European Central Bank is set to increase its key lending rate for the seventh time in a row on Thursday and investors are divided between 25 basis-point and 50 basis-point increase.
The Reserve Bank of Australia unexpectedly hiked its cash rate by 25 basis-point to 3.85%, lifting its reference rate to the highest level since April 20212.
Rates are still negative with inflation at 7.0%, and the central bank signaled more rate increases ahead.
Crude oil plunged more than 4.5% to a three-month low on the worries that rising rates in the U.S. and Europe may dampen economic activities and China's post-Covid demand rebound has lagged market expectations.
U.S. Indexes & Yields
The S&P 500 index fell 1.4% to 4,111.0 and the Nasdaq Composite decreased 1.1% to 12,075.60.
The yield on 2-year Treasury notes inched slightly higher to 4.15%, 10-year Treasury notes edged down to 3.54% and 30-year Treasury bonds held at 3.80%.
Crude oil fell $4.08 to $71.55 a barrel and natural gas prices fell 8 cents to $2.231 a thermal unit.
U.S. Stock Movers
Uber Technologies Inc increased 5.6% to $34.70 after the ride-hailing company reported better-than-expected quarterly results.
Revenue in the quarter increased 29% to $8.82 billion and net loss in the quarter shrank to $157 million from $5.9 billion and diluted loss per share fell to 8 cents from $3.03 a year ago.
Monthly active users in the quarter increased 13% from a year ago to 130 million and completed transactions soared 24% to 2.12 billion.
The company guided gross booking between $33 billion and $34 billion and adjusted operating earnings between $800 million and $850 million.
Pfizer Inc increased 1.1% to $39.61 after the company reported a sharp decline in revenue following the end of Covid-19 revenue.
Revenue in the first quarter decreased 29% to $18.2 billion from $25.6 billion and net income plunged 30% to $5.5 billion from $7.86 billion and diluted earnings per share fell to 97 cents from $1.37 a year ago.
The company reiterated its full-year 2023 outlook and forecasted revenue to fall between 29% and 33% or between $67.0 billion and $71.0 billion.
Excluding Covid-19 products, the company forecasted operating revenue to increase between 7% and 9%.
DuPont de Nemours Inc dropped 8% to $63.55 after the company forecasted weaker-than-expected revenue and earnings outlook in the current quarter on the slower than expected recovery in the electronics market.
BP Plc declined 4.8% to 508.70 pence after the energy company reported a decline in profit driven by lower crude oil and natural gas prices.
The company declared an ordinary share dividend of 61.6 cents per share and announced to purchase $1.75 billion of its shares prior to the release of its second quarter results around the first week in July.
The company also slowed its pace of stock repurchase to $4.0 billion, at the lower end of its $14 billion to $18 billion in capital expenditure in 2023, based on the $60 a barrel Brent crude price forecast.
Net profit attributable to shareholders declined to $8.2 billion from $10.2 billion in the fourth quarter of 2022 but ahead of $20.4 billion in losses a year ago.
Chegg Inc plunged 46% to $9.47 after the company reported a decline in revenue and the company said AI tools are negatively impacting new subscribers growth.
Revenue in the first quarter declined 7% to $187.6 million and net income plunged to $2.2 million from $5.7 million and diluted earnings per share fell to 2 cents from 4 cents a year ago.
"In the first part of the year, we saw no noticeable impact from ChatGPT on our new account growth and we were meeting expectations on new sign-ups. However, since March we saw a significant spike in student interest in ChatGPT.
We now believe it’s having an impact on our new customer growth rate," said Dan Rosensweig, chief executive officer and president.
European Markets Dropped 1%, Crude Oil Plunged 4.5%
European markets traded lower amid growing anxieties of rate decisions from central bankers and looming worries of economic slowdown.
Benchmark indexes declined after investors returned from a three-day weekend and reacted to another U.S. bank failure and worries how future aggressive rate hikes in the region will impact commercial real estate.
The European Central Bank is set to increase its key lending rate on Thursday and investors are divided over the 25 basis points or 50 basis points increase.
The U.S. Federal Reserve Bank is set to increase its policy rate by 25 basis points after a two-day meeting on Wednesday as policymakers grapple with the fallout from the failure of a fourth bank in the last two months.
Despite the multiple rate hikes and a sharp fall in energy prices over the last year, inflation is well anchored in the economy and real rates remain negative.
Eurozone Inflation Accelerated In April
The Euro Area inflation increased to 7.0% in April from a 13-month low of 6.9% in March, Eurostat reported Tuesday.
Core inflation, which exclude food and energy prices, slightly eased to 5.6% from record high 5.7% in March.
Energy prices rebounded to 2.5% in April from a decline of 0.9% in March and services inflation accelerated to 5.2% from 5.1% respectively.
However, food, alcohol and tobacco inflation slowed to 13.6% in April from 15.5% in March and non-energy industrial goods inflation slowed to 6.2% from 6.6% respectively.
On a monthly basis, consumer prices rose 0.7% in April, slower than 0.9% in March.
Europe Indexes & Yields
The DAX index decreased 1.2% to 15,726.94, the CAC-40 index declined 1.5% to 7,383.20 and the FTSE 100 index fell 1.2% to 7,773.03.
In the previous week, the DAX index increased 0.4%, the CAC-40 index dropped 1.8% and the FTSE 100 index declined 0.6%.
The yield on 10-year German Bunds eased to 2.26%, French bonds to 2.85%, the UK gilts to 3.66% and Italian bonds to 4.17%.
The euro hovered near a one-year high against the dollar as the U.S. economy faced banking turmoil.
The euro edged higher to $1.109, the British pound to $1.245 and the Swiss franc to 89.31 cents.
Brent crude fell $3.83 to $75.45 a barrel and the Dutch TTF natural gas decreased €1.31 to €37.53 per MWh.
Europe Stock Movers
BP Plc declined 4.8% to 508.70 pence after the energy company reported a decline in profit driven by lower crude oil and natural gas prices.
The company also slowed its pace of stock repurchase.
HSBC Holdings plc increased 5.3% to 604.40 pence after the UK and China based lender tripled its quarterly profit.
Ashtead Group plc increased 3% to 4,713.0 pence after the subsea equipment rental company announced a stock repurchase plan.
Restaurant Group Plc jumped 17.1% to 47.40 pence after the company said business between January and April of 2023 "continued to be very encouraging."
Comparable sales in the first quarter ending on April 2 soared 37% at concessions or stores located at airports, increased at Pubs and 2% at Wagamama.
In the first four months to April, comparable sales increased 31% at Concessions, 4% at Wagamama and increased 6% at Pubs. However, comparable sales declined 3% at restaurants included in leisure.
Ferrexpo Plc increased 1.8% to 110.0 pence after the company said chief executive Jim Norton will step down after nine years leading the iron ore pellet maker.
DuPont to Acquire Spectrum Plastics for $1.75 B
Scott Peters
02 May, 2023
New York City
DuPont announced the acquisition of Spectrum Plastics Group for $1.75 billion from AEA Investors.
The net purchase price after-tax is estimated at $1.72 billion.
The net purchase price is 15.6 times of 2023 forecasted EBITDA and 13.2 times including expected $20 million of cost synergies.
Spectrum manufactures specialty medical devices and components, serving 22 of the top 26 medical device OEMs.
The company's products include therapeutic areas such as structural heart, electrophysiology, surgical robotics and cardiovascular.
DuPont said it expects the deal to be "immediately accretive" to its adjusted earnings per share and to achieve high single-digit return on invested capital by year five.
Following the acquisition, approximately 10% of DuPont's consolidated revenue will come from healthcare and strengthen the company's position in low cyclicality healthcare markets.
Spectrum Plastics is owned by AEA Investors LP, founded in 1968 by the Rockefeller, Mellon and Harriman family interests and S.G. Warburg & Co. as a private investment vehicle for a select group of industrial family offices and has committed capital of $19 billion.
In 2021, DuPont completed the purchase of Arizona-based Rogers Corporation for $5.2 billion.
Rogers products include high-frequency circuit materials, ceramic substrates for power semiconductor devices, and high-performance foams which go into a variety of highly specialized end-markets including electric vehicles and advanced driver assistance systems.
Movers: BP, Chegg, Dupont, Pfizer, Uber
Scott Peters
02 May, 2023
New York City
Uber Technologies Inc increased 5.6% to $34.70 after the ride-hailing company reported better-than-expected quarterly results.
Revenue in the quarter increased 29% to $8.82 billion and net loss in the quarter shrank to $157 million from $5.9 billion and diluted loss per share fell to 8 cents from $3.03 a year ago.
Monthly active users in the quarter increased 13% from a year ago to 130 million and completed transactions soared 24% to 2.12 billion.
The company guided gross booking between $33 billion and $34 billion and adjusted operating earnings between $800 million and $850 million.
Pfizer Inc increased 1.1% to $39.61 after the company reported a sharp decline in revenue following the end of Covid-19 revenue.
Revenue in the first quarter decreased 29% to $18.2 billion from $25.6 billion and net income plunged 30% to $5.5 billion from $7.86 billion and diluted earnings per share fell to 97 cents from $1.37 a year ago.
The company reiterated its full-year 2023 outlook and forecasted revenue to fall between 29% and 33% or between $67.0 billion and $71.0 billion.
Excluding Covid-19 products, the company forecasted operating revenue to increase between 7% and 9%.
Pfizer also confirmed that it has not repurchased any of its shares and the company has no plan to buy back its own shares in the remainder of the year.
The company still has $3.3 billion available in its stock repurchase program.
DuPont de Nemours Inc dropped 8% to $63.55 after the company forecasted weaker-than-expected revenue and earnings outlook in the current quarter on the slower than expected recovery in the electronics market.
Revenue in the first quarter decreased 8% to $3.0 billion from $3.3 billion and net income plunged to $265 million from $508 million and diluted earnings per share dropped to 56 cents from 95 cents a year ago.
“Due to the delay in electronics recovery, we are adjusting the high-end of our existing guidance ranges for full year net sales, operating EBITDA and 4 adjusted EPS.
For the second quarter 2023, we expect similar results to the first quarter as overall market conditions are anticipated to be generally the same,” said chief financial officer Lori Koch.
The company estimated second quarter revenue of $3.02 billion and operating earnings of $750 million and adjusted earnings per share of 84 cents.
For the full-year 2023, the company tightened its revenue range to between $12.3 billion and $12.5 billion and operating earnings range between $3.0 billion and $3.1 billion and adjusted earnings per share between $3.55 and $3.70.
DuPont announced the acquisition of Spectrum Plastics Group for $1.75 billion from AEA Investors. After-tax, net purchase price is $1.72 billion.
The net purchase price is 15.6 times of 2023 forecasted EBITDA and 13.2 times including expected $20 million of cost synergies.
BP Plc declined 4.8% to 508.70 pence after the energy company reported a decline in profit driven by lower crude oil and natural gas prices.
The company declared an ordinary share dividend of 61.6 cents per share and announced to purchase $1.75 billion of its shares prior to the release of its second quarter results around the first week in July.
The company also slowed its pace of stock repurchase to $4.0 billion, at the lower end of its $14 billion to $18 billion in capital expenditure in 2023, based on the $60 a barrel Brent crude price forecast.
Net profit attributable to shareholders declined to $8.2 billion from $10.2 billion in the fourth quarter of 2022 but ahead of $20.4 billion in losses a year ago.
Chegg Inc plunged 46% to $9.47 after the company reported a decline in revenue and the company said AI tools are negatively impacting new subscribers growth.
Revenue in the first quarter declined 7% to $187.6 million and net income plunged to $2.2 million from $5.7 million and diluted earnings per share fell to 2 cents from 4 cents a year ago.
"In the first part of the year, we saw no noticeable impact from ChatGPT on our new account growth and we were meeting expectations on new sign-ups. However, since March we saw a significant spike in student interest in ChatGPT.
We now believe it’s having an impact on our new customer growth rate," said Dan Rosensweig, chief executive officer and president.
Stocks Nosedived On Banking Worries and Rate Path Anxieties
Barry Adams
02 May, 2023
New York City
Stocks declined and investors turned cautious after a weeklong teach rally ahead of the Fed's rate decision tomorrow.
Investors reacted to a fresh batch of earnings but generally ignored improving results and focused on negatives.
Regional banking crisis remained front and center despite some investors estimating the end of the crisis after JP Morgan Chase acquired First Republic Bank.
Rising rates are going to add more stress on balance sheets of several large and small banks, and investors are not sure how many banks have balance sheets and depositor profiles similar to failed Silicon Valley Bank and First Republic Bank.
The U.S. Federal Reserve is scheduled to announce its rate decision at the end of a 2-day policy meeting on Wednesday.
Financial markets are anticipating another 25 basis-point rate hike despite cooling of the headline inflation but core inflation has remained well anchored near 5%.
Moreover, multiple rate hikes have failed to cool tight labor market conditions, lower inflation rate to 2% and slowdown economic growth, reflecting higher rates are likely to last longer.
The European Central Bank is set to increase its key lending rate for the seventh time in a row on Thursday and investors are divided between 25 basis points and 50 basis points increase.
The Reserve Bank of Australia unexpectedly hiked its cash rate by 25 basis points to 3.85%, lifting the reference rate to the highest level since April 20212.
Rates are still negative with inflation at 7.0%, and the central bank signaled for more rate increases ahead.
U.S. Indexes & Yields
The S&P 500 index added 1.61 points to 4,167.87 and the Nasdaq Composite decreased 13.99 points to 12,212.60.
The yield on 2-year Treasury notes inched slightly higher to 4.15%, 10-year Treasury notes edged down to 3.54% and 30-year Treasury bonds held at 3.80%.
Crude oil fell $1.48 to $74.14 a barrel and natural gas prices fell 8 cents to $2.231 a thermal unit.
U.S. Stock Movers
Uber Technologies Inc increased 5.6% to $34.70 after the ride-hailing company reported better-than-expected quarterly results.
Revenue in the quarter increased 29% to $8.82 billion and net loss in the quarter shrank to $157 million from $5.9 billion and diluted loss per share fell to 8 cents from $3.03 a year ago.
Monthly active users in the quarter increased 13% from a year ago to 130 million and completed transactions soared 24% to 2.12 billion.
The company guided gross booking between $33 billion and $34 billion and adjusted operating earnings between $800 million and $850 million.
Pfizer Inc increased 1.1% to $39.61 after the company reported a sharp decline in revenue following the end of Covid-19 revenue.
Revenue in the first quarter decreased 29% to $18.2 billion from $25.6 billion and net income plunged 30% to $5.5 billion from $7.86 billion and diluted earnings per share fell to 97 cents from $1.37 a year ago.
The company reiterated its full-year 2023 outlook and forecasted revenue to fall between 29% and 33% or between $67.0 billion and $71.0 billion.
Excluding Covid-19 products, the company forecasted operating revenue to increase between 7% and 9%.
DuPont de Nemours Inc dropped 8% to $63.55 after the company forecasted weaker-than-expected revenue and earnings outlook in the current quarter on the slower than expected recovery in the electronics market.
BP Plc declined 4.8% to 508.70 pence after the energy company reported a decline in profit driven by lower crude oil and natural gas prices.
The company declared an ordinary share dividend of 61.6 cents per share and announced to purchase $1.75 billion of its shares prior to the release of its second quarter results around the first week in July.
The company also slowed its pace of stock repurchase to $4.0 billion, at the lower end of its $14 billion to $18 billion in capital expenditure in 2023, based on the $60 a barrel Brent crude price forecast.
Net profit attributable to shareholders declined to $8.2 billion from $10.2 billion in the fourth quarter of 2022 but ahead of $20.4 billion in losses a year ago.
Chegg Inc plunged 46% to $9.47 after the company reported a decline in revenue and the company said AI tools are negatively impacting new subscribers growth.
Revenue in the first quarter declined 7% to $187.6 million and net income plunged to $2.2 million from $5.7 million and diluted earnings per share fell to 2 cents from 4 cents a year ago.
"In the first part of the year, we saw no noticeable impact from ChatGPT on our new account growth and we were meeting expectations on new sign-ups. However, since March we saw a significant spike in student interest in ChatGPT.
We now believe it’s having an impact on our new customer growth rate," said Dan Rosensweig, chief executive officer and president.
Europe Movers: Ashtead, BP, Ferrexpo, HSBC, Restaurant Group
Bridgette Randall
02 May, 2023
Frankfurt
BP Plc declined 4.8% to 508.70 pence after the energy company reported a decline in profit driven by lower crude oil and natural gas prices.
The company declared an ordinary share dividend of 61.6 cents per share and announced to purchase $1.75 billion of its shares prior to the release of its second quarter results around the first week in July.
The company also slowed its pace of stock repurchase to $4.0 billion, at the lower end of its $14 billion to $18 billion in capital expenditure in 2023, based on the $60 a barrel Brent crude price forecast.
Net profit attributable to shareholders declined to $8.2 billion from $10.2 billion in the fourth quarter of 2022 but ahead of $20.4 billion in losses a year ago.
HSBC Holdings plc increased 5.3% to 604.40 pence after the UK and China based lender tripled its quarterly profit.
Ashtead Group plc increased 3% to 4,713.0 pence after the subsea equipment rental company announced a stock repurchase plan.
The company plans to acquire $500 million of its own shares in the period starting today and ending on April 30, 2024.
Restaurant Group Plc jumped 17.1% to 47.40 pence after the company said business between January and April of 2023 "continued to be very encouraging."
Comparable sales in the first quarter ending on April 2 soared 37% at concessions or stores located at airports, increased at Pubs and 2% at Wagamama.
In the first four months to April, comparable sales increased 31% at Concessions, 4% at Wagamama and increased 6% at Pubs. However, comparable sales declined 3% at restaurants included in leisure.
Ferrexpo Plc increased 1.8% to 110.0 pence after the company said chief executive Jim Norton will step down after nine years leading the iron ore pellet maker.
Rate Hike Worries Kept European Indexes Lower
Bridgette Randall
02 May, 2023
Frankfurt
European markets traded lower amid growing anxieties of rate decisions from central bankers and looming worries of economic slowdown.
Benchmark indexes declined after investors returned from a three-day weekend and reacted to another U.S. bank failure and worries how future aggressive rate hikes in the region will impact commercial real estate.
The European Central Bank is set to increase its key lending rate on Thursday and investors are divided over the 25 basis points or 50 basis points increase.
The U.S. Federal Reserve Bank is set to increase its policy rate by 25 basis points after a two-day meeting on Wednesday as policymakers grapple with the fallout from the failure of a fourth bank in the last two months.
Despite the multiple rate hikes and a sharp fall in energy prices over the last year, inflation is well anchored in the economy and real rates remain negative.
Eurozone Inflation Accelerated In April
The Euro Area inflation increased to 7.0% in April from a 13-month low of 6.9% in March, Eurostat reported Tuesday.
Core inflation, which exclude food and energy prices, slightly eased to 5.6% from record high 5.7% in March
Energy prices rebounded to 2.5% in April from a decline of 0.9% in March and services inflation accelerated to 5.2% from 5.1% respectively.
However, food, alcohol and tobacco inflation slowed to 13.6% in April from 15.5% in March and non-energy industrial goods inflation slowed to 6.2% from 6.6% respectively.
On a monthly basis, consumer prices rose 0.7% in April, slower than 0.9% in March.
Europe Indexes & Yields
The DAX index decreased 0.3% to 15,881.34, the CAC-40 index declined 0.5% to 7,457.51 and the FTSE 100 index was nearly unchanged at 7,869.58.
In the previous week, the DAX index increased 0.4%, the CAC-40 index dropped 1.8% and the FTSE 100 index declined 0.6%.
The yield on 10-year German Bunds eased to 2.36%, French bonds to 2.95%, the UK gilts to 3.78% and Italian bonds to 4.24%.
The euro hovered near a one-year high against the dollar as the U.S. economy faced banking turmoil.
The euro edged higher to $1.095, the British pound to $1.247 and the Swiss franc to 89.86 cents.
Brent crude fell 48 cents to $78.84 a barrel and the Dutch TTF natural gas decreased 55 cents to €38.29 per MWh.
Europe Stock Movers
BP Plc declined 4.8% to 508.70 pence after the energy company reported a decline in profit driven by lower crude oil and natural gas prices.
The company also slowed its pace of stock repurchase.
HSBC Holdings plc increased 5.3% to 604.40 pence after the UK and China based lender tripled its quarterly profit.
Ashtead Group plc increased 3% to 4,713.0 pence after the subsea equipment rental company announced a stock repurchase plan.
Restaurant Group Plc jumped 17.1% to 47.40 pence after the company said business between January and April of 2023 "continued to be very encouraging."
Comparable sales in the first quarter ending on April 2 soared 37% at concessions or stores located at airports, increased at Pubs and 2% at Wagamama.
In the first four months to April, comparable sales increased 31% at Concessions, 4% at Wagamama and increased 6% at Pubs. However, comparable sales declined 3% at restaurants included in leisure.
Ferrexpo Plc increased 1.8% to 110.0 pence after the company said chief executive Jim Norton will step down after nine years leading the iron ore pellet maker.
Stocks On Wall Street Closed Down and Treasury Yields Advanced Ahead of Rate Decision
Barry Adams
01 May, 2023
New York City
Regional banks remained in focus and investors recalibrated fast evolving financial disruptions with a potential to blow into a crisis.
The speedy demise of the First Republic Bank and speedier sale of the failed bank to one of the largest and well capitalized banks failed to quell market anxieties.
With the steep inversion of the yield curve and no end in sight of where the Federal Reserve is heading over the next six to nine months, investors are worried that there are more zombie banks out there with unrealized losses.
Stocks on Wall Street traded slightly higher in a cautious trading after the regional banking crisis devoured another bank after weeks of chaos.
First Republic Bank is the second example, after the failure of Silicon Valley Bank, of how regulators at all levels and board of directors failed to stem the risk stemming from the rapid rise in interest rates over the last thirteen months.
The failure of Silicon Valley Bank cost the deposit insurance fund about $20 billion and the First Republic Bank seizure is expected to cost at least $13 billion, according to the FDIC.
The FDIC has its own capital shortfall issues as well, the deposit insurance fund is very thinly capitalized and needs at least another $85 billion to meet the statutory capital requirement as determined by the U.S. Congress.
This capital shortfall expanded by $50 billion after the two relatively large bank failures in as many months.
One would like to think that regional banking crisis is over, but with no end in sight of rapid rate hikes and depositors are increasingly aware of the rising losses held by U.S. government securities at all banks, not just regional banks.
U.S. Indexes & Yields
The S&P 500 index added 1.61 points to 4,167.87 and the Nasdaq Composite decreased 13.99 points to 12,212.60.
The yield on 2-year Treasury notes inched lower to 4.14%, 10-year Treasury notes rose to 3.57% and 30-year Treasury bonds held at 3.81%.
Crude oil fell $0.93 to $75.85 a barrel and natural gas prices fell 9 cents to $2.31 a thermal unit.
U.S. Stock Movers
First Republic Bank dropped 34% to $2.30 after the Federal Deposit Insurance Corporation seized the ailing bank.
JP Morgan agreed to acquire all deposits and a "substantial majority" of the seized bank after the U.S. government agency failed to convince rival banks to acquire the troubled lender.
First Republic marks the third bank failure of an American bank since March.
The acquisition includes approximately $173 billion of loans and $30 billion of securities and assumption of approximately $92 billion of deposits, including $30 billion of large bank deposits, which will be repaid post-close or eliminated in consolidation.
FDIC will provide loss share agreements covering acquired single-family residential mortgage loans and commercial loans, as well as $50 billion of five-year, fixed-rate term financing.
JP Morgan Chase increased 4.4% to $144.30.
Norwegian Cruise Line Holdings Ltd advanced 1.5% to $13.55 after the company reported its latest quarterly results.
Revenue in the first quarter soared to $1.8 billion from $521.9 million and the net loss shrank to $159.2 million from $982.7 million and diluted loss per share fell to 38 cents from $2.35 a year ago.
Gross cruise costs per capacity day was approximately $298 in the quarter and $301 in constant currency.
Adjusted net cruise costs excluding fuel per capacity day in constant currency was approximately $161, a 14% decrease compared to the second half of 2022 as the company stepped up its cost containment efforts.
Global Weakness In Chip Demand Dragged South Korea's Exports and Taiwan's Economy
Asian and European markets are closed for Labor Day holiday and crude oil prices eased.
Crude oil prices in Asia and London traded down on private trading platforms following the unexpected decline in factory activities in China.
South Korea's exports fell for the seventh month in a row on the persistent demand weakness for semiconductor chips and shipments to China plunged.
India's factory activities expanded for the fourth month in a row on the rising new orders and shipments.
However, export-reliant and tech-focused Taiwan's economy decreased 3.02% from a year ago in the first quarter ending in March and fell 6.37% from the final quarter of 2022.
The technology hardware and components weakness is driven by a sharp fall in demand for smartphones, personal computers and other advanced electronics products.
China's Manufacturing Activities Eased In April
China's manufacturing activities slowed in April, the latest data from the National Bureau of Statistics showed over the weekend.
The official Purchasing Managers' Index declined to a four-month low of 49.2 from 51.9 in March,
The reading above 50 indicates expansion and below shows a contraction in growth, and the latest data indicated contraction for the first time in factory activities since December.
Factory output grew the least since January but new orders and purchasing activities declined after advancing in the prior three months.
India's Factory Activities Accelerated In April
India's factory activity index or purchasing manager's index accelerated to a four-month high of 57.2 in April from 56.4 in March, the S&P Global said in a report Monday.
Input costs accelerated on the faster price increases for raw materials but output prices rose to a 3-month high.
Forward looking sentiment improved from an eight-month low in March on higher demand inquiries and clearance of pending order approvals.
South Korea's Exports Fall On Semiconductor Weakness
South Korea's exports declined for the seventh month in a row, the Ministry of Trade, Industry and Energy reported Monday.
Exports declined 14.2% from a year ago to a three-month low to $49.6 billion, following a 13.6% decline in the previous month.
The 7-month string of exports decline is the longest period since 2019 and the sharpest fall on the ongoing weakness in semiconductor chip demand.
Exports to China, South Korea's largest trading partner, dropped 26.5% to China, 4.4% to the U.S. but rose 9.9% to the European Union and 30.3% to the Middle East.
Chips exports plunged 41% from a year ago and steel products shipments fell 10.7%.
Imports fell 13.3% in April, the largest fall since August 2020, resulting in a smaller trade deficit of $2.62 billion compared to $4.63 billion in March.
Tokyo and Sydney Indexes Advanced
Most Asian markets were closed for the Labor Day Holiday.
The Nikkei index increased 0.9% to 29,123.18 and the ASX 200 index in Sydney increased 0.4% to 7,334.60.
Financial markets in Indonesia, Shanghai, Hong Kong, Indonesia and Thailand were closed.