Market Update
Movers: lululemon, McCormick, Micron, Paychex, UBS
Scott Peters
29 Mar, 2023
New York City
Lululemon Athletica Inc increased 14.4% to $365.05 after the athleisure retailer reported a surge in comparable same store sales in the fourth quarter.
Revenue in the fourth quarter ending in January increased 30% to $2.8 billion on comparable sales surge of 27%.
Net income in the quarter dropped to $119.8 million from $434.5 million and diluted earnings per share fell to 94 cents from $3.37 a year ago.
The company estimated fiscal first quarter 2023 net revenue in the range of $1.890 billion to $1.930 billion, representing growth of approximately 18%.
Diluted earnings per share are expected to be in the range of $1.93 to $2.00 for the quarter.
McCormick & Company Inc advanced 37 cents to $81.53 after the spice maker reported stable revenue in its latest quarter.
Revenue in the fiscal first quarter ending in February increased 3% to $1.56 billion from $1.52 billion and net income fell to $139.1 million from $154.9 million and diluted earnings per share dropped to 52 cents from 57 cents a year ago.
The company's sales were affected by 2% from the lower consumption in China due to Covid-related disruption, exiting from Russia and divestiture of the company's Kitchen Basics business.
Micron Technology Inc advanced 6.2% to $63.0 after the semiconductor manufacturer reported smaller-than-anticipated quarterly loss.
Revenue in the fiscal second quarter ending on March 2 declined to $3.69 billion from $4.09 billion in the prior quarter and $7.79 billion a year ago.
The company swung to a loss of $2.3 billion from a profit of $2.3 billion and diluted earnings per share was ($2.12) from $2.0 a year ago.
The company guided revenue in the third quarter of $3.7 billion and diluted loss per share of $1.79.
“Customer inventories are getting better, and we expect gradual improvements to the industry’s supply-demand balance," said chief executive Sanjay Mehrotra.
Paychex, Inc increased 6.01% to $115.53 after the payroll services provider reported stronger-than-expected revenue growth and earnings per share.
Revenue in the fiscal third quarter ending in February increased 8% to $1.38 billion and net income rose 9% to $467.4 million from $430.7 million and diluted earnings per share rose to $1.29 from $1.19 a year ago.
"We have no cash, restricted cash, or investments deposited with Silicon Valley Bank or Signature Bank and have met all client fund obligations related to employee payment services and remittances to applicable tax or regulatory agencies," the company said in its earnings release statement.
UBS Group AG increased 3.5% to $19.95 after the company recalled former chief executive Sergio Ermotti to manage the recent acquisition of Credit Suisse.
Ermotti served as chief executive for nine years to October 2020 and is currently Chairman of Swiss Re.
Ermotti will replace current CEO Ralph Hamers on April 6 and Hamers will advise the company during the transition.
Tech Rally Lifts Major Averages On Wall Street
Barry Adams
29 Mar, 2023
New York City
Benchmark indexes advanced on Wall Street and investors looked beyond banking system worries.
Stocks opened higher after banking crisis worries eased and Treasury yields held stable.
Federal Reserve's vice chairman supervision Michael Barr said financial meltdown at the failed Silicon Valley Bank resulted from poor risk management.
Barr's comments soothed market nerves for now and investors surmised that the U.S. banking system may be able to avoid a wider contagion.
Tech stocks rallied on Wall Street following the surge in Alibaba Group in Hong Kong and SoftBank in Tokyo.
Alphabet Inc, Amazon.com Inc, Meta Platforms and Apple Inc advanced between 1% and 2.5%.
Weekly Mortgage Applications Index Rebounded
Mortgage applications volume increased 2.9% in the week ended March 24, the fourth weekly increase in a row, according to the weekly survey released by the Mortgage Bankers Association on Wednesday.
“Application activity increased as mortgage rates declined for the third straight week.
The 30-year fixed rate declined to 6.45%, the lowest level in over a month,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist.
The Refinance Index increased 5% from the previous week and was 61% lower than the same week one year ago.
The seasonally adjusted Purchase Index increased 2% from one week earlier and the unadjusted index increased 2% compared with the previous week and was 35% lower than the same week a year ago.
Indexes & Yields
The S&P 500 index increased 1.02% to 4,011.67 and the Nasdaq Composite index increased 1.3% to 11,868.15.
The yield on 2-year Treasury notes increased 6 basis points to 4.13%, 10-year Treasury notes rose 4 basis points to 3.60% and 30-year Treasury bonds increased 2 basis points to 3.81%.
Crude oil increased 82 cents to $74.07 a barrel and natural gas price edged down 4 cents to $2.10 a thermal unit.
U.S. Movers
UBS Group AG increased 3.5% to $19.95 after the company recalled former chief executive Sergio Ermotti to manage the recent acquisition of Credit Suisse.
Ermotti served as chief executive for nine years to October 2020 and is currently Chairman of Swiss Re.
Ermotti will replace current CEO Ralph Hamers on April 6 and Hamers will advise the company during the transition.
Lululemon Athletica increased 14.4% to $365.05 after the athleisure retailer reported a surge in comparable same store sales in the fourth quarter.
Revenue in the fourth quarter ending in January increased 30% to $2.8 billion on comparable sales surge of 27%.
Net income in the quarter dropped to $119.8 million from $434.5 million and diluted earnings per share fell to 94 cents from $3.37 a year ago.
The company estimated fiscal first quarter 2023 net revenue in the range of $1.890 billion to $1.930 billion, representing growth of approximately 18%.
Diluted earnings per share are expected to be in the range of $1.93 to $2.00 for the quarter.
Micron Technology Inc advanced 6.2% to $63.0 after the semiconductor manufacturer reported smaller-than-anticipated quarterly loss.
Revenue in the fiscal second quarter ending on March 2 declined to $3.69 billion from $4.09 billion in the prior quarter and $7.79 billion a year ago.
The company swung to a loss of $2.3 billion from a profit of $2.3 billion and diluted earnings per share was ($2.12) from $2.0 a year ago.
The company guided revenue in the third quarter of $3.7 billion and diluted loss per share of $1.79.
“Customer inventories are getting better, and we expect gradual improvements to the industry’s supply-demand balance," said chief executive Sanjay Mehrotra.
Global Markets On Hold After Higher-Rates-Longer Complicates Earnings Outlook
Barry Adams
28 Mar, 2023
New York City
Investors remained on the sidelines despite the growing chorus of reassurances from central bankers and government officials.
Benchmark indexes struggled to cross the flatline on the worries that the interest rates may stay higher for longer than previously anticipated.
The ongoing turmoil in the U.S. and European banking sector may not prevent the U.S. Federal Reserve from lifting rates higher at the next meeting in May.
Despite nine rate hikes over the last fourteen months, the economy is set to expand at 3.2% annual pace in the first quarter, but higher interest rates are expected to slow down the growth in 2023 to 0.4%.
Economic growth projections from the Federal Reserve indicate that the economy may face negative growth in the second and third quarter, as higher rates kick in.
Higher rates may weaken economic growth and ease tight labor market conditions, meaning wage gains may slow as well, but slower wage inflation or economic activities may not slow down inflation.
Because supply chain issues and rising cost of services are driving the inflation, and none are in direct control of the Federal Reserve.
Moreover, higher interest rates for longer are certainly going to increase financial burden on regional banks, forcing the Fed to tread carefully.
Investors are still pricing for the Fed to pause after the next rate increase in May, but that is based on the assumption that the inflation is cooling and on its way to drop to the 2%-level preferred by the policymakers.
The watered down measure of inflation, the PCE index, which excludes many drivers of price gains, is stubbornly stuck at more than twice the inflation level preferred by the Federal Reserve, indicating it will take many more rate hikes before the inflation drops to the desired level.
Higher interest rates have varying degrees of impact on different aspects of the economy, and interest rate is a blunt tool with lagging results forcing policymakers to tighten more than needed.
The Fed's dilemma is if it waits too long to raise rates then the higher inflation will become even more entrenched in the economy, and if it lifts rates too fast than the stress in the banking system could lead to more defaults.
In either scenario, stocks are still reflecting rosy earnings scenarios for the current year, and the Fed's inflation-fight is also going to keep earnings subdued for at least three more quarters to come.
International Goods Trade Deficit Held In February
The international goods trade deficit in February edged up to $91.6 billion from $91.1 billion in January, the U.S. Census Bureau reported Tuesday.
Exports in February declined to $167.8 billion from $174.6 billion in January but rose from $159.1 billion a year ago.
imports in February decreased to $259.5 billion from $265.6 billion in January and fell from $264.4 billion a year ago.
Price Unadjusted Wholesale and Retail inventories Advanced in February
Wholesale inventories, seasonally adjusted but price unadjusted, in February increased 0.2% from January to $920.3 billion, and increased 12.2% from a year ago.
Retail inventories, seasonally adjusted but not adjusted for prices, in February increased 0.8% from January to $747.3 billion, and up 10.8% from a year ago.
U.S. Indexes & Yields
The S&P 500 index decreased 6.23 points to 3,971.30 and the Nasdaq Composite index fell 52.76 points or 0.5% to 11,716.08.
The yield on 2-year Treasury notes rose to 4.05%, 10-year Treasury notes increased to 3.55% and 30-year Treasury bonds advanced to 3.77%.
Crude oil traded up 38 cents to $73.18 a barrel and natural gas edged down 8 cents to $2.00 a thermal unit.
U.S. Stock Movers
Alibaba Group Holding Ltd jumped 8.02% to $93.03 after the Chinese e-commerce giant said it plans to split the company into six separate units including e-commerce, media and cloud services.
Lyft Inc increased 6.0% to $10.19 after the ridesharing company said its co-founders, chief executive Logan Green and President John Zimmer, plan to step down from management roles and transition to non-executive roles.
Former Amazon executive David Risher will become chief executive officer on April 17.
Occidental Petroleum jumped 2.1% to $60.89 and a regulatory filing showed Berkshire Hathaway acquired additional 3.7 million shares for $216 million, increasing the Warren Buffett controlled conglomerate's stake to 23.5%.
European Markets Erased Early Gains
European markets struggled to hold early gains after investors turned cautious.
Benchmark indexes in London, Paris and Frankfurt opened higher but lost gains as the session progressed.
Investors stepped up to buy banks and financial services stocks after the easing of contagion worries.
Resource stocks closed higher after crude oil and base metal and commodities prices advanced.
In the final hour of trading, major averages lost most of the session's gains on the worries of recession and rising risks to losses at banks in the face of rapid rise in interest rates.
Investors reviewed the latest comments from the Bank of England Governor Andrew Bailey, but skepticism prevailed as rapid rise in interest rates are expected to cause larger losses in assets held by banks.
The U.K. banking system is in a "strong position capital and liquidity wise," Bailey told the Treasury Select Committee of the U.K.
Investors also overlooked a slight weakening of manufacturers' confidence in France for the first time in four months.
The manufacturing confidence declined to 104 in March from 105 in February, the statistical agency Insee reported Tuesday.
UK shop price index, a measure of food and non-food prices, increased in March, the British Retail Consortium reported Tuesday.
BRC-NielsenIQ shop price index increased 8.9% from a year ago in March, faster than 8.4% in February.
The annual increase was driven by a record increase in food prices by 15.0% and a record price increase of 5.9% in non-food items.
Europe Indexes & Yields
The DAX index increased 14.34 points to 15,142.02, the CAC-40 index added 10.07 points to 7,088.34 and the FTSE 100 index advanced 12.48 points to 7,484.25.
The yield on 10-year German Bunds increased to 2.27%, French bonds to 2.79%, the UK gilts to 3.45% and Italian bonds to 4.14%.
The euro edged higher to $1.08, the British pound inched up to $1.233 and the Swiss franc to 91.94 cents.
Brent crude oil increased 72 cents to $78.84 a barrel and the Dutch TTF natural gas price increased 57 cents to Є43.10 per MWh.
Europe Movers
A rebound in crude oil prices and base commodities lifted resource stocks.
Anglo American, Glencore, BP Plc, Shell Plc increased between 1% and 3%.
Diageo Plc declined 1.02% to 3,546.50 pence after the company said chief executive Ivan Menezes will retire at the end of June after ten years of service.
Debra Crew, current chief operating officer, will assume the leadership role and join the company's board from July 1.
Ocado Plc increased 2.5% to 463.52 pence after the online grocery delivery company reaffirmed its full-year earnings outlook.
The company said revenue in the first quarter ending in February increased 3.4% to £584 million and average weekly orders rose 3.6% to 381,000.
The company said active customers increased 13.8% to 951,000 from 835,000 a year ago.
RATIONAL AG declined 1.0% to €594.0 despite the commercial kitchen supplier posting a rise in revenue in fiscal year 2022.
Revenue in the fourth quarter increased 50% to Є290.4 million from Є193.5 million and after-tax net income jumped 182% to Є61.0 million from Є21.7 million and earnings per share rose to Є5.37 from Є1.91 a year ago.
UBS Group AG increased 1.7% to Sfr 17.74 after chief executive Ralph Hammers said buying Credit Suisse is a growth opportunity for the group.
"While we did not seek this transaction, we were prepared" and "We did not buy Credit Suisse only to close it," added Hammers in an internal note and reported first by Reuters.
European Markets Erased Early Advances, Record Rise in UK Shop Price Index
Bridgette Randall
28 Mar, 2023
Frankfurt
European markets struggled to hold early gains after investors turned cautious.
Benchmark indexes in London, Paris and Frankfurt opened higher but lost gains as the session progressed.
Investors stepped up to buy banks and financial services stocks after the easing of contagion worries.
Resource stocks closed higher after crude oil and base metal and commodities prices advanced.
In the final hour of trading, major averages lost most of the session's gains on the worries of recession and rising risks to losses at banks in the face of rapid rise in interest rates.
Investors reviewed the latest comments from the Bank of England Governor Andrew Bailey, but skepticism prevailed as rapid rise in interest rates are expected to cause larger losses in assets held by banks.
The U.K. banking system is in a "strong position capital and liquidity wise," Bailey told the Treasury Select Committee of the U.K.
Investors also overlooked a slight weakening of manufacturers' confidence in France for the first time in four months.
The manufacturing confidence declined to 104 in March from 105 in February, the statistical agency Insee reported Tuesday.
UK shop price index, a measure of food and non-food prices, increased in March, the British Retail Consortium reported Tuesday.
BRC-NielsenIQ shop price index increased 8.9% from a year ago in March, faster than 8.4% in February.
The annual increase was driven by a record increase in food prices by 15.0% and a record price increase of 5.9% in non-food items.
Europe Indexes & Yields
The DAX index increased 14.34 points to 15,142.02, the CAC-40 index added 10.07 points to 7,088.34 and the FTSE 100 index advanced 12.48 points to 7,484.25.
The yield on 10-year German Bunds increased to 2.27%, French bonds to 2.79%, the UK gilts to 3.45% and Italian bonds to 4.14%.
The euro edged higher to $1.08, the British pound inched up to $1.233 and the Swiss franc to 91.94 cents.
Brent crude oil increased 72 cents to $78.84 a barrel and the Dutch TTF natural gas price increased 57 cents to Є43.10 per MWh.
Europe Movers
A rebound in crude oil prices and base commodities lifted resource stocks.
Anglo American, Glencore, BP Plc, Shell Plc increased between 1% and 3%.
Diageo Plc declined 1.02% to 3,546.50 pence after the company said chief executive Ivan Menezes will retire at the end of June after ten years of service.
Debra Crew, current chief operating officer, will assume the leadership role and join the company's board from July 1.
Ocado Plc increased 2.5% to 463.52 pence after the online grocery delivery company reaffirmed its full-year earnings outlook.
The company said revenue in the first quarter ending in February increased 3.4% to £584 million and average weekly orders rose 3.6% to 381,000.
The company said active customers increased 13.8% to 951,000 from 835,000 a year ago.
RATIONAL AG declined 1.0% to €594.0 despite the commercial kitchen supplier posting a rise in revenue in fiscal year 2022.
Revenue in the fourth quarter increased 50% to Є290.4 million from Є193.5 million and after-tax net income jumped 182% to Є61.0 million from Є21.7 million and earnings per share rose to Є5.37 from Є1.91 a year ago.
UBS Group AG increased 1.7% to Sfr 17.74 after chief executive Ralph Hammers said buying Credit Suisse is a growth opportunity for the group.
"While we did not seek this transaction, we were prepared" and "We did not buy Credit Suisse only to close it," added Hammers in an internal note and reported first by Reuters.
Movers: Alibaba, Carnival, Lyft, Occidental Petroleum, PVH, Walgreens Boots
Scott Peters
28 Mar, 2023
New York City
Alibaba Group Holding Ltd jumped 8.02% to $93.03 after the Chinese e-commerce giant said it plans to split the company into six separate units including e-commerce, media and cloud services.
Carnival Corp increased 6% to $9.34 after the cruise line operator reported record quarterly bookings in the fiscal first quarter ending in February.
Revenue in the quarter increased to $4.4 billion from $1.6 billion and net loss shrank to $693 million from $1.9 billion and diluted loss per share decreased to 55 cents from $1.66 a share.
The cruise line estimated 98% occupancy in the fiscal second quarter and estimated adjusted operating earnings between $600 million and $700 million, compared to $382 million in the first quarter.
Lyft Inc increased 6.0% to $10.19 after the ridesharing company said its co-founders, chief executive Logan Green and President John Zimmer, plan to step down from management roles and transition to non-executive roles.
Former Amazon executive David Risher will become chief executive officer on April 17.
Occidental Petroleum Corporation jumped 2.1% to $60.89 and a regulatory filing showed Berkshire Hathaway acquired additional 3.7 million shares for $216 million, increasing the Warren Buffett controlled conglomerate's stake to 23.5%.
PVH Corp soared 18.9% to $87.58 after the apparel maker posted better-than-expected earnings in its latest quarter.
Revenue in the fourth quarter ending in January increased 2% to $2.49 billion and net income declined to $138.7 million from $390.8 million and diluted earnings per share fell to $2.18 from $5.553 a year ago.
Revenue in the full-year 2022 fell to $9.0 billion from $9.2 billion and net income decreased to $200.4 million from $952.3 million and diluted earnings per share plunged to $3.03 from $13.25 a year ago.
The apparel maker guided revenue in 2023 to increase between 3% and 4% and diluted earnings per share is projected to be $10.0 compared to $3.03 a year ago.
Walgreens Boots Alliance Inc advanced 3.7% to $34.17 after the pharmacy operator reported better-than-expected fiscal second quarter earnings.
Sales in the fiscal second quarter ending in February increased 3.3% to $34.8 billion from $33.7 billion and net income fell to $703 million from $883 million and diluted earnings per share declined to 81 cents from $1.02 a year ago.
The company retained its full-year adjusted earnings per share outlook between $4.45 and $4.65 a share, reflecting acceleration in business in February.
Price Unadjusted Wholesale and Retail inventories Advanced in February
Brian Turner
28 Mar, 2023
New York City
Wholesale and retail inventories rose in February, reflecting strong confidence in business community, the U.S. Census Bureau reported Tuesday.
Wholesale inventories, seasonally adjusted but price unadjusted, in February increased 0.2% from January to $920.3 billion, and increased 12.2% from a year ago.
Retail inventories, seasonally adjusted but not adjusted for prices, in February increased 0.8% from January to $747.3 billion, and up 10.8% from a year ago.
International Goods Trade Deficit Stayed Elevated In February
Brian Turner
28 Mar, 2023
New York City
The international goods trade deficit in February edged up to $91.6 billion from $91.1 billion in January, the U.S. Census Bureau reported Tuesday.
The preliminary international trade data will be revised in about a month based on a wider estimate.
Exports in February declined 3.8% to $167.8 billion from $174.6 billion in January but rose from $159.1 billion a year ago.
imports in February decreased 2.3% to $259.5 billion from $265.6 billion in January and fell from $264.4 billion a year ago.
Despite the slight decline, the international goods deficit remained elevated as imports of capital goods and vehicles stayed above annual average.
U.S. Investors Turn Cautious On Growing Recession Risks Driven By Regional Bank Capital Shortfall Worries
Barry Adams
28 Mar, 2023
New York City
Stocks on Wall Street traded down in early trading as investors reassessed the health of the U.S. banking system and the prospects of economic recession.
Investors turned cautious, despite the reassurances from regulators and officials, on the worries of wider contagion in the regional banking system.
U.S. officials have been offering soothing words but banks are set to declare larger losses in treasury securities assets, which are generally deemed safest investments.
Moreover, higher-rates-for-longer are going to expand losses in Treasury securities, forcing many banks to raise capital or seek government support.
Rising losses in regional banks and the near-impossible task of raising new equity capital in the current market conditions are also fueling worries that private sector lending will slow down as banks focus on rebuilding their balance sheets.
International Goods Trade Deficit Held In February
The international goods trade deficit in February edged up to $91.6 billion from $91.1 billion in January, the U.S. Census Bureau reported Tuesday.
Exports in February declined to $167.8 billion from $174.6 billion in January but rose from $159.1 billion a year ago.
imports in February decreased to $259.5 billion from $265.6 billion in January and fell from $264.4 billion a year ago.
Price Unadjusted Wholesale and Retail inventories Advanced in February
Wholesale inventories, seasonally adjusted but price unadjusted, in February increased 0.2% from January to $920.3 billion, and increased 12.2% from a year ago.
Retail inventories, seasonally adjusted but not adjusted for prices, in February increased 0.8% from January to $747.3 billion, and up 10.8% from a year ago.
U.S. Indexes & Yields
The S&P 500 index decreased 1.38 points to 3,976.15 and the Nasdaq Composite index fell 60.44 points or 0.5% to 11,708.40.
The yield on 2-year Treasury notes rose to 4.02%, 10-year Treasury notes increased 3.54% and 30-year Treasury bonds advanced to 3.78%.
Crude oil traded unchanged at $72.78 a barrel and natural gas edged down 3 cents to $2.05 a thermal unit.
U.S. Stock Movers
Alibaba Group Holding Ltd jumped 8.02% to $93.03 after the Chinese e-commerce giant said it plans to split the company into six separate units including e-commerce, media and cloud services.
Lyft Inc increased 6.0% to $10.19 after the ridesharing company said its co-founders, chief executive Logan Green and President John Zimmer, plan to step down from management roles and transition to non-executive roles.
Former Amazon executive David Risher will become chief executive officer on April 17.
Occidental Petroleum jumped 2.1% to $60.89 and a regulatory filing showed Berkshire Hathaway acquired additional 3.7 million shares for $216 million, increasing the Warren Buffett controlled conglomerate's stake to 23.5%.
Global Investors Anticipate More U.S. Government Backstopping In Banking Sector
Barry Adams
27 Mar, 2023
New York City
Stocks attempted to rebound on the first day of a new week and investors searched for good news as the U.S. financial regulators and Treasury officials offered a familiar solution to the fast moving regional banking crisis.
Federal officials are looking for ways to provide additional liquidity to the banking system and hunt for ways to stem the crisis from spreading further into the banking system.
The Federal Deposit Insurance Corporation managed to sell only about 40% of the total assets of the former Silicon Valley Bank for about 25% of its nominal value and entered into a loss sharing arrangement with the acquiring bank First Citizen BancShares.
The FDIC said for now losses stemming from saving Silicon Valley Bank stand at $20 billion and the cost is likely to rise if assets held in the receivership are sold at a larger discount.
The Deposit Insurance Fund had $128.2 billion to insure a total deposit of $17.7 trillion across all 7,738 FDIC insured and supervised banks, according to the fourth quarter 2022 report released by the agency.
In other words, the FDIC is insuring deposit with only 0.7% of funds in its account.
U.S. Treasury officials and bank regulators have managed to calm markets for now, but larger losses are looming in Treasury securities holdings at banks of all sizes as interest rates keep going higher.
Higher interest rates decrease the value of the Treasury securities, as bond prices adjust to lower values reflecting higher yields.
On Monday, stock investors overlooked stress in the banking sector but bond yields and crude oil prices closed higher.
U.S. Indexes & Yields
higher bond yields dragged tech stocks lower but broader market indexes closed up.
The S&P 500 index increased 6.53 points to 3,977.53 and the Nasdaq Composite index declined 55.12 points or 0.5% to 11,768.84.
The yield on 2-year Treasury notes increased 23 basis points to 4.01%, 10-year Treasury notes inched up 16 points to 3.53% and 30-year Treasury bonds 12 basis points to 3.77%.
Gold edged down $20.32 to $1,956.99 an ounce, after trading at a one-year high of $2,000.
Crude oil increased $3.61 to $72.81 a barrel and natural gas futures declined 11 cents to $2.09 a thermal unit.
US Movers
First Citizens BancShares Inc soared 47% to $854.49 after the North Carolina-based bank agreed to acquire Silicon Valley Bank's assets from the FDIC.
First Citizens agreed to pay $16.5 billion for $72 billion of assets (or loan portfolio), own and operate 17 branches of the former bank, the FDIC said in a statement.
The FDIC will retain $90 billion of assets of the now defunct Silicon Valley Bank and the agency received stock appreciation rights potentially worth $500 million in the First Citizens BancShares, Inc.
The FDIC-controlled Silicon Valley Bank Bridge Bank, National Association will reopen as First-Citizen Bank & Trust Company, a wholly-owned subsidiary of First Citizens BancShares.
The FDIC estimated the cost of the failure of Silicon Valley Bank to be approximately $20 billion and the exact cost will be determined once the receivership is terminated.
The FDIC and First–Citizens Bank & Trust Company entered into a loss–share transaction on the commercial loans it purchased from the former Silicon Valley Bridge Bank, National Association.
The FDIC as receiver and First–Citizens Bank & Trust Company will share in the losses and potential recoveries on the loans covered by the loss–share agreement.
First Republic Bank jumped 14% and PacWest Bancorp advanced 4% after Bloomberg News reported that the U.S. government is looking to provide additional liquidity to regional banks as the government and agencies search for a buyer for Firth Republic Bank.
European Markets Look Beyond Current Turmoil In Banks
European market indexes advanced after the U.S. bank worries eased and investors shifted focus to domestic economic and corporate news.
Stocks traded higher after Germany's business confidence unexpectedly improved and investors overlooked slowing credit growth.
With the full effect of higher interest rates still not felt by the economy, economic slowdown may be approaching faster than previously expected.
On Monday, investors focused on the receding banking worries and rising confidence in the German business community.
Eurozone Private Lending Growth Slowed In February
Eurozone private lending rose at the slowest pace in February, reflecting higher interest rates and weak credit demand, the European Central Bank reported Monday.
Private sector lending increase slowed to an annual growth rate of 3.3% in February from 3.8% in January.
M1 money supply, which includes currency in circulation and overnight deposits, declined 2.7% in February, a faster pace than the decrease of 0.8% in January.
M3 money supply, a wider measure of money in circulation, rose at a slower annual pace of 2.9% from 3.5% in January.
German Business Climate Index Improved In March
The business climate index increased to 93.3 in March from 91.1 in February, the Ifo Institute reported Monday.
The index increased for the fifth month in a row after current situation and expectations indexes improved.
The current situation indicator increased more-than-expected to 95.4 in March from 93.9 in the previous month and the expectations index increased to 91.2 from 88.4 respectively.
"Despite turbulence at some international banks, the German economy is stabilizing." said Clemens Fuest, president of the ifo Institute.
In manufacturing, the index rose substantially and companies were more satisfied with their current business situation. Moreover, pessimism almost completely disappeared from their expectations.
Sentiment improved considerably, especially in key areas of manufacturing such as the automotive, chemical, electrical and electronics, and machinery and equipment industries.
Europe Indexes & Yields
The DAX index increased 1.1% to 15,127.68, the CAC-40 index added 0.9% to 7,078.27 and the FTSE 100 index advanced 0.9% to 7,471.77.
The yield on 10-year German Bunds edged higher to 2.26%, French bonds rose to 2.76% and the UK gilts to 3.38% and Italian bonds to 4.08%.
The euro edged up to $1.078, the British pound inched higher $1.22 and the Swiss franc to 91.63 cents.
Brent crude oil added $2.98 to $77.98 a barrel and the Dutch TTF natural gas price rose Є1.42 to Є42.53 a MWh.
Europe Movers
Deutsche Bank AG increased 6.2% to €9.07 after German Chancellor Olaf Scholz rejected comparison with Credit Suisse and said that Germany's largest bank is "profitable" and there is no "reason to be concerned."
The comments lifted stocks of other peers in the region.
Commerzbank, BNP Paribas, Barclays and UniCredit jumped between 1% and 3%.
Salzgitter AG soared 6.9% to €33.54 after the steelmaker forecasted better-than-expected profit in 2023.
Novartis AG advanced 8.4% to $90.55 after the Swiss drug maker reported positive results for its breast cancer trial drug Kisqali.
"The Independent Data Monitoring Committee recommended stopping the trial early as the primary endpoint of invasive disease-free survival has been met," the company said in a statement released to investors.
Eurozone Bank Lending Growth Weakened, German Business Climate Index Improved
Bridgette Randall
27 Mar, 2023
Frankfurt
European market indexes advanced after the U.S. bank worries eased and investors shifted focus to domestic economic and corporate news.
Stocks traded higher after Germany's business confidence unexpectedly improved and investors overlooked slowing credit growth.
With the full effect of higher interest rates still not felt by the economy, economic slowdown may be approaching faster than previously expected.
On Monday, investors focused on the receding banking worries and rising confidence in the German business community.
Eurozone Private Lending Growth Slowed In February
Eurozone private lending rose at the slowest pace in February, reflecting higher interest rates and weak credit demand, the European Central Bank reported Monday.
Private sector lending increase slowed to an annual growth rate of 3.3% in February from 3.8% in January.
M1 money supply, which includes currency in circulation and overnight deposits, declined 2.7% in February, a faster pace than the decrease of 0.8% in January.
M3 money supply, a wider measure of money in circulation, rose at a slower annual pace of 2.9% from 3.5% in January.
German Business Climate Index Improved In March
The business climate index increased to 93.3 in March from 91.1 in February, the Ifo Institute reported Monday.
The index increased for the fifth month in a row after current situation and expectations indexes improved.
The current situation indicator increased more-than-expected to 95.4 in March from 93.9 in the previous month and the expectations index increased to 91.2 from 88.4 respectively.
"Despite turbulence at some international banks, the German economy is stabilizing." said Clemens Fuest, president of the ifo Institute.
In manufacturing, the index rose substantially and companies were more satisfied with their current business situation. Moreover, pessimism almost completely disappeared from their expectations.
Sentiment improved considerably, especially in key areas of manufacturing such as the automotive, chemical, electrical and electronics, and machinery and equipment industries.
Europe Indexes & Yields
The DAX index increased 1.1% to 15,127.68, the CAC-40 index added 0.9% to 7,078.27 and the FTSE 100 index advanced 0.9% to 7,471.77.
The yield on 10-year German Bunds edged higher to 2.26%, French bonds rose to 2.76% and the UK gilts to 3.38% and Italian bonds to 4.08%.
The euro edged up to $1.078, the British pound inched higher $1.22 and the Swiss franc to 91.63 cents.
Brent crude oil added $2.98 to $77.98 a barrel and the Dutch TTF natural gas price rose Є1.42 to Є42.53 a MWh.
Europe Movers
Deutsche Bank AG increased 6.2% to €9.07 after German Chancellor Olaf Scholz rejected comparison with Credit Suisse and said that Germany's largest bank is "profitable" and there is no "reason to be concerned."
The comments lifted stocks of other peers in the region.
Commerzbank, BNP Paribas, Barclays and UniCredit jumped between 1% and 3%.
Salzgitter AG soared 6.9% to €33.54 after the steelmaker forecasted better-than-expected profit in 2023.
Novartis AG advanced 8.4% to $90.55 after the Swiss drug maker reported positive results for its breast cancer trial drug Kisqali.
"The Independent Data Monitoring Committee recommended stopping the trial early as the primary endpoint of invasive disease-free survival has been met," the company said in a statement released to investors.