Premarket action on Monday had the three major U.S. indexes trading higher. The Dow Jones industrials were up 0.13%, the S&P 500 up 0.55% and the Nasdaq 0.99% higher.
All 11 market sectors closed lower for the second consecutive day on Friday. Real estate (−3.25%) and materials (−2.15%) fell the most. Consumer staples (−0.46%) and health care (−0.74%) posted the day’s smallest losses. The Dow closed down 1.07%, the S&P 500 down 1.45% and the Nasdaq down 1.76%.
Two-year Treasuries dropped 30 basis points to 4.6% on Friday, and 10-year notes fell by 23 basis points to close at 3.4%. In Monday’s premarket, two-year notes were trading at around 4.31% and 10-year notes at about 3.57%.
As bad as the weekend turned out, it is probably safe to say that Monday morning could have been a lot worse if the Federal Reserve and the Treasury Department had not taken steps to guarantee all depositors at Silicon Valley Bank (SIVB) and Signature Bank of New York (SBNY). Both have been closed and their management replaced. London-based HSBC Holdings PLC (NYSE: HSBC) has purchased SVB’s U.K. unit for £1 (about $1.21). It’s a start.
Wall Street no longer expects the Fed to increase interest rates at its FOMC meeting next week.
Other banks under severe pressure Monday morning were First Republic Bank (NYSE: FRC), Western Alliance Bancorporation (NYSE: WAL) and PacWest Bancorp (NASDAQ: PACW). First Republic dropped nearly 15% on Friday and traded down more than 70% in Monday’s premarket session. Western Alliance fell by more than 14% on Friday and was down about 70% Monday morning. And PacWest tumbled nearly 38% on Friday and traded down about 43% early Monday.
The five largest U.S. banks dropped single-digit percentages Friday and traded down by similar amounts Monday morning.
On the other side of the ledge, Dow component Pfizer Inc. (NYSE: PFE) has agreed to acquire Seagen Inc. (NASDAQ: SGEN) for $229.00 in cash for each Seagen share. The deal is worth a total enterprise value of some $43 billion and represents a premium of 33% to Friday’s closing price for Seagen stock. The deal gives Pfizer a solid position in antibody-drug conjugate (ADC) drugs used to treat some forms of cancer. Pfizer and Seagen expect to close the deal late this year or early in 2024, pending the approval of Seagen shareholders.
There are no major economic data releases on Monday’s calendar. On Tuesday, consumer price index (CPI) data for February will be published, and Wednesday brings the February report on the producer price index (PPI) as well. Retail sales data for last month is also on the calendar for a premarket release Wednesday.
Friday’s trading volume was well above the five-day average. New York Stock Exchange losers outpaced winners by 2,637 to 442, while Nasdaq decliners led advancers by more than 4 to 1.
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