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Profit from the Pros By Kevin Matras Executive Vice President
Stocks Were Mixed Yesterday, Financials Were Mostly Higher On Better Bank News
Stocks closed mixed yesterday with the Dow and the S&P in the green, while the Nasdaq slipped into the red. For the year however, the Nasdaq leads the other indexes with a gain of 12.4%.
Stocks were up early after news broke that First Citizens BancShares would acquire the deposits and loans of Silicon Valley Bank. First Citizens soared more than 53% on the news. And many of the troubled bank names over the last few weeks saw sharp gains as well. First Republic was one of those names with a gain of more than 11% as efforts were underway to shore up support for them in particular, while financial authorities were looking for ways to provide more support for regional banks in general.
It was a good day for smaller and mid-sized banks. But many are still way down from where they were before SVB's collapse just a few short weeks ago.
In other news, yesterday's Dallas Fed Manufacturing Survey was a mixed bag with the General Activity Index coming in at -15.7 vs. last month's -13.5 and views for -11.0. The Production Index, however, came in at 2.5 vs. last month's report of -2.8.
Today we'll get another look at the economy with the International Trade in Goods report, Retail and Wholesale Inventories, the Case-Shiller Home Price Index, the Richmond Fed Manufacturing Index, and Consumer Confidence.
We'll also hear from the Fed's Vice Chair for Supervision, Michael Barr, as he releases his review on SVB's failure before the House Financial Services Committee.
Plenty of impactful news. But the info the market's really waiting for is Friday's Personal Consumption Expenditures (PCE) index, which is the Fed's preferred inflation indicator.
The latest CPI and PPI reports both showed inflation falling more than expected, and down quite a bit from their summer highs last year. Another report showing inflation easing more than expected would give the Fed additional ammo to consider pausing their rate hike sooner rather than later.
As it stands now, they are only expected to raise one more time to the tune of 25 basis points at the conclusion of their next meeting on May 3.
Granted, we'll get three more inflation reports after Friday's PCE report and before the next FOMC announcement. But the more data points we can get showing inflation easing more than expected, the better.
And that's bullish for stocks.
In the meantime, we have the rest of the week to get thru first.
See you tomorrow,
Executive Vice President, Zacks Investment Research
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