Dow Jones futures will open on Sunday evening along with S&P 500 futures and Nasdaq futures. The FDIC and other regulators are trying to limit the damage from last week’s collapse of SVB Financial, which aims to make funds available to depositors by Monday morning.
X
Last week the stock market faced a big fall SVB Financial ,SIVB) and crypto bank Silvergate Financial ,SI), led to sharp losses for bank stocks.
west coast financial eg First Republic Bank ,FRC) And Western Alliance Bancorp ,wall) were particularly hard hit, but signature bank ,SBNY) And charles schwab ,schw) There were also big losers. JPMorgan Chase ,jpm) got support on Friday.
Major indices traded strongly during the week breaking several support areas as several major stocks also came under pressure. Treasury yields fell, the Fed’s rate movement moved heavily into the flow.
In the midst of a weak, volatile, uncertain market, investors should not trade new positions and instead hold them largely or entirely in cash. But keep an eye on those stocks which are close to buy. Palo Alto Networks ,panwFacebook Guardian meta platform ,meta, upside down beauty ,Ultra, Monolithic Power Systems ,mpwr) And United Airlines ,ual) Five stocks are showing strength, close to buy. PANW stock has formed a handle on a long consolidation, while META stock has a new flat base. Ulta stock is taking support at key levels. Monolithic Power is operating on a tall cup-with-handle base, while UAL has retreated from the stock buy zone.
During this, Apple ,AAPL) also has a new flat base. Tesla ,TSLA) sold hard last week, but found support at its 10-week line on Friday. TSLA stock is far from actionable.
But keep an eye on financials like FRC Stock, WAL, SBNY and SCHW, as well as the XLF Financial ETF and the KRE Regional Bank ETF. Also pay attention to well-capitalized giants like JP Morgan. JPM stock fell sharply last week, but bounced on Friday.
insulating ,pod) will replace SIVB stock in the S&P 500 before Wednesday’s open. PODD stock jumped Friday night.
PANW stock on ibd leaderboard Watchlist. MPWR stock is on the IBD Long-Term Leaders Watchlist. Shares of Monolithic Power, United Airlines, and ULTA Are Up IBD 50, The Meta Platform was Friday’s IBD Stock of the Day.
The embedded video in this article discusses market action in depth, analyzing JPMorgan Chase, Palo Alto Networks, and Meta Stock.
FDIC races to limit SVB financial fallout
The Federal Deposit Insurance Corp. and state regulators on Friday closed SVB Financial and its Silicon Valley bank subsidiary, the biggest bank failure since Washington Mutual in the 2008 financial crisis.
Treasury Secretary Janet Yellen said on Sunday that the FDIC and other regulators want to address the SVB situation in a “timely manner.” He said that the government will help the depositors but will not give bailout.
Bloomberg reported on Saturday that the FDIC is trying to quickly sell the assets and make available at least a portion of the uninsured deposits.
As of December 31, approximately 87.5% of Silicon Valley Bank’s $126 billion in deposits exceeded the FDIC insurance limit. friday night, stop ,stop) revealed that $487 million, or 26% of its cash, is held by SVB, with those deposits “largely uninsured.” ROKU stock fell after hours.
Etsy ,Etsy) said on Saturday that it could not pay vendors because of its tie-up with Silicon Valley Bank.
Hundreds of companies, including many venture capital and tech startups, have deposits or business relationships with Silicon Valley Bank. There are reports that many people will soon struggle to meet payroll without access to accounts.
If the FDIC doesn’t quickly resolve SVB Financial and absorb all depositors, many more banks with technical exposure could be in trouble, including Western Alliance, First Republic and Signature Bank.
Bloomberg reported that the FDIC and Federal Reserve are considering creating a fund for backstop deposits if more banks run into trouble.
After the financial crisis, the law greatly increased capital requirements and on banks, but it also limited the ability of regulators to rescue individual financial institutions.
Even if all depositors were protected, bank stock and loan holders likely would not be.
Tesla CEO Elon Musk tweeted Friday night that he is “open to the idea” of Twitter buying SVB and turning it into a digital bank. Musk has said that he wants to make Twitter a bigger payments player. But even if he were to go through, bank holding rules would probably block SVB’s Twitter acquisition.
dow jones futures today
Dow Jones futures open at 6PM ET, along with S&P 500 futures and Nasdaq 100 futures.
Remember that overnight action in Dow futures and elsewhere does not translate into actual trading in the next regular stock market session.
Join IBD experts as they analyze top stocks and market conditions on IBD Live
stock market weekly action
The stock market started higher but quickly declined for large losses due to fears of a Fed rate hike and subsequent shutdowns of SVB Financial and Silvergate.
Shares jumped twice on Friday as Treasury Secretary Janet Yellen expressed confidence in a “resilient” banking system. But the positive momentum soon faded.
The Dow Jones Industrial Average fell 4.4% in last week’s stock market trading. The S&P 500 index closed 4.55%. The Nasdaq Composite slid 4.7%. The small-cap Russell 2000 dived 8%.
Apple stock fell just 1.7% to 148.50 for the week, just above the 200-day line. But this is after reversing from Monday’s intraday high of 156.30, almost reaching AAPL’s 157.48 buy point.
The 10-year Treasury yield fell 29 basis points to 3.69% last week after hitting a 2023 high of 4.09% on March 2. The 2-year yield fell 27 basis points to 4.59%, including gains of 31 basis points and 48% on Friday. Issue Thursday-Friday.
US crude futures fell 3.8% to $76.68 a barrel last week, but recovered on Friday.
ETF
Among growth ETFs, the Innovator IBD 50 ETF (ffty) dropped just over 6% last week, while the innovator IBD Breakout Opportunities ETF (boxing) dropped 3.4%. iShares Extended Tech-Software Sector ETF (IGV) left 5.7%. VanEck Vectors Semiconductor ETF (SMH) MPWR stock retreated 3%, along with SMH Holding.
Reflecting more speculative stocks, the ARK Innovation ETF (ARKK) gained 10.9% last week and the ARK Genomics ETF (arkg) 11.4%. Tesla stock is a major holding in Arc Invest’s ETF. TSLA fell 12.3% for the week amid fresh price cuts and security checks. But shares were up on Friday.
SPDR S&P Metals & Mining ETF (XME) sold 11.1% last week. Global X US Infrastructure Development ETF (pave) retreated 7.1%. US Global Jets ETF (jet) fell below 4.8 with UAL stock being a major factor. SPDR S&P Homebuilders ETF (xhb) fell 4.85%. Energy Select SPDR ETF (XLE) left 5.3%. Health Care Select Sector SPDR Fund (xlv) fell to 3.85%, its lowest level since October.
Financial Select SPDR ETF (xlf) JP Morgan and SCHW stock dived 8.5% with big holdings. SPDR S&P Regional Banking ETF (kre) fell 15.7%, its worst weekly loss since the Covid crash in March 2020. SIVB Stock and Western Alliance are notable components.
Five Best Chinese Stocks to Watch Now
market analysis
The stock market suffered losses last week, with major indices selling heavily and breaking several support levels. The indices tried to bounce back from Friday’s early losses, briefly turning positive before hitting fresh lows.
At the beginning of the week the S&P 500, Nasdaq Composite and Russell 2000 fell through their 21-day lines and decisively below their 50-day and 200-day moving averages. The S&P 500 and Russell 2000 ended Friday below January 6’s follow-through day’s close.
The Dow Jones is at its worst level since the beginning of November.
Fed chief Jerome Powell’s indication that he favors a “swift” rate hike hit the market Tuesday-Wednesday. But SVB Financial and crypto bank Silvergate Capital shook the banks at the end of the week.
Friday morning’s attempt to rebound failed as the FDIC announced the failure of SVB Financial.
If the fear of a bank contagion materializes, it would be dire for Wall Street and the economy. However, if SVB Financial’s woes are viewed as isolated and not a widespread banking fear, it fades quickly, which may restore overall market confidence. But it is also likely to push Treasury yields and the dollar higher, increasing the likelihood of a Fed rate hike.
The probability of a half-point Fed rate hike rose from 30% to more than 80% on Monday after Fed chief Powell’s testimony, then fell below 40% on Friday.
All this uncertainty adds to the hard-landing fear, either through a banking crisis or because the Fed overreacts by raising rates.
SVB Financial has taken a big loss on the bond as interest rates have soared over the past year due to Fed rate hikes. This is a matter of concern for other regional banks and their investors.
Major stocks also saw strong selling last week. A number of names stuck around for most of the week, but most of them struggled by the end of Friday.
By Thursday, Friday’s jobs report and the upcoming March 14 CPI inflation report looked like major events. And they’re still important. A relatively low CPI inflation rate may give Fed chief Powell and his allies the excuse that they only need to raise rates by a quarter point.
But in the very near term, Wall Street may be taking its cues from the banking sector. So focus on the banks, from biggest recent losers like First Republic to relative giants like broader ETFs and JPM stock.
JPMorgan was the S&P 500’s second-best stock on Friday, even as SBNY stock, First Republic and Schwab were among the worst performers. This is a sign that investors view JPMorgan as relatively safe. But if JPM stock breaks last week’s low, it will be a cause for concern.
Tim the market with IBD’s ETF market strategy
What do we do now
The stock market is selling off amid bad news and even more uncertainty.
This is not a healthy environment. Investors will have to be largely or completely on the sidelines to see how this shakes out. If conditions clear up in a few days or weeks, fresh buying opportunities will arise.
Build your watchlist with a focus on stocks showing strong relative strength. If they’re near potential buy points like Meta Stock, Monolithic Power, or Palo Alto, great. But it’s not a priority right now.
Read The Big Picture every day to keep up with market direction and the leading stocks and sectors.
Please follow Ed Carson on Twitter @IBD_ECarson For stock market updates and much more.
You might also like:
Tesla’s Dirty Little War in China
Find the next big winning stock with MarketSmith
Want to make quick profits and avoid huge losses? try swingtrader
Best growth stocks to buy and watch
IBD Digital: Unlock IBD’s premium stock list, tools and analysis today