Stock Index Futures Muted as Investors Await Fed Meeting, JPMorgan Takes Over First Republic

June S&P 500 futures (ESM23) are up +0.04%, and June Nasdaq 100 E-Mini futures (NQM23) are up +0.05% this morning as market participants digested JPMorgan’s takeover of First Republic’s assets while looking ahead to the Federal Reserve’s upcoming interest rate decision as well as Friday’s nonfarm payrolls report. 

The California Department of Financial Protection and Innovation said Monday it had taken possession of First Republic Bank (FRC), resulting in the third failure of an American regional bank in two months. The Federal Deposit Insurance Corporation has been appointed as receiver and accepted a takeover offer from JPMorgan Chase (JPM) to assume all deposits, including all uninsured deposits and “substantially all assets” of the ailing lender.

“As part of the transaction, First Republic Bank’s 84 offices in eight states will reopen as branches of JPMorgan Chase Bank, National Association, today during normal business hours,” the FDIC said in a statement.

In Friday’s trading session, the benchmark S&P 500 rose to a 1-1/2 week high, the blue-chip Dow climbed to a 2-1/2 month high, and the tech-heavy Nasdaq 100 notched an 8-1/4 month high as strong corporate earnings results and favorable inflation data boosted market sentiment. 

Data on Friday showed the U.S. core PCE price index, a key inflation gauge monitored by the Federal Reserve, stood at +0.3% m/m and +4.6% y/y in March, compared to expectations of +0.3% m/m and +4.5% y/y. Also, U.S. personal spending came in at unchanged m/m in March, stronger than expectations of -0.1% m/m. In addition, U.S. April Chicago PMI unexpectedly rose to an 8-month high of 48.6, stronger than expectations of 43.5. At the same time, the U.S. employment cost index stood at +1.2% q/q in Q1, stronger than expectations of +1.1% q/q. 

In the coming week, the U.S. Federal Reserve interest rate decision and Fed Chair Jerome Powell’s post-policy meeting press conference will be the main highlight. U.S. rate futures have priced in an 86.3% chance of a 25 basis point rate increase and a 13.7% chance of no hike on Wednesday. 

In addition, market participants will be eyeing a spate of economic data, including U.S. Nonfarm Payrolls, Factory Orders, JOLTs Job Openings, ADP Nonfarm Employment Change, S&P Global Composite PMI, Services PMI, ISM Non-Manufacturing Employment, ISM Non-Manufacturing PMI, Crude Oil Inventories, Exports, Imports, Initial Jobless Claims, Nonfarm Productivity (preliminary), Trade Balance, Unit Labor Costs (preliminary), Average Hourly Earnings, Participation Rate, Private Nonfarm Payrolls, and Unemployment Rate.

Meanwhile, first-quarter earnings season rolls on, and investors await a barrage of earnings reports from big-name companies, including Apple Inc (AAPL), Ford Motor Company (F), Starbucks Corporation (SBUX), Advanced Micro Devices Inc (AMD), Kraft Heinz Co (KHC), Marriott International Inc (MAR), Moderna Inc (MRNA), Pfizer Inc (PFE), and Uber Technologies Inc (UBER). Analysts expect aggregate S&P 500 earnings to fall 1.9% year-over-year in Q1, compared with an expected drop of 5.1% at the start of April.

Today, all eyes are focused on the U.S. ISM Manufacturing PMI in a couple of hours. Economists, on average, forecast that April ISM Manufacturing PMI will stand at 46.8, compared to the previous value of 46.3.

Also, investors are likely to focus on the U.S. Manufacturing PMI, which was at 49.2 in March. Economists foresee the new figure to be 50.4.

U.S. ISM Manufacturing Prices will also be closely watched today. Economists foresee this figure to stand at 49.0 in April, compared to the previous number of 49.2.

U.S. ISM Manufacturing Employment will be reported today as well. Economists expect April’s figure to be 47.9, compared to the previous value of 46.9. 

In the bond markets, United States 10-Year rates are at 3.467%, up +0.44%.

U.K. and European markets are closed today to mark Labor Day.

Japan’s Nikkei 225 Stock Index (NIK) closed up +0.92%, while the Chinese market was closed for a holiday.

Japan’s Nikkei 225 Stock Index closed higher today and hit a more than eight-month high. Railroad and airline stocks soared on Monday amid the potential boon for tourism, while a weakening yen boosted export-oriented stocks. Data on Monday showed Japan’s manufacturing activity remained in contraction territory for the sixth straight month in April. Meanwhile, shares of NEC Corporation jumped over +14% after the tech services provider reported a 29% increase in fiscal-year operating profit on strong demand for information-technology services and projected further earnings growth. At the same time, Sony Group fell over -1% after the Japanese electronics and entertainment conglomerate’s annual operating profit guidance missed expectations. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down 7.31% and hit a new 1-month low of 15.22.

The Japanese April Manufacturing PMI came in at 49.5, in line with expectations.

The Japanese April Household Confidence stood at 35.4, stronger than expectations of 34.7.

Pre-Market U.S. Stock Movers

JPMorgan Chase & Co (JPM) gained over +2% in pre-market trading after the bank announced that it had acquired all First Republic’s deposits, including uninsured deposits and a “substantial majority of assets.” First Republic Bank (FRC) tumbled over -42% in pre-market trading.

IVERIC bio Inc (ISEE) surged over +17% in pre-market trading after Japan’s Astellas Pharma said Monday it had agreed to acquire the U.S. drugmaker for $40 per share in cash.

Li Auto Inc (LI) climbed about +3% in pre-market trading after the company announced that it had delivered 25,681 vehicles in April, setting another monthly record.

Exxon Mobil Corp (XOM) dropped more than -1% in pre-market trading after Goldman Sachs downgraded the stock to neutral from buy.

Essex Property Trust Inc (ESS) rose over +1% in pre-market trading after Piper Sandler upgraded the stock to overweight from neutral.

Logitech International SA (LOGI) gained about +1% in pre-market trading after Morgan Stanley upgraded the stock to equal weight from underweight.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Monday - May 1st

Stryker (SYK), Vertex (VRTX), Arista Networks (ANET), NXP (NXPI), VICI Properties (VICI), Diamondback (FANG), ON Semiconductor (ON), WEC Energy (WEC), Global Payments (GPN), SBA Communications (SBAC), Hologic (HOLX), Invitation Homes (INVH), MGM (MGM), FMC (FMC), Check Point Software (CHKP), Everest (RE), Symbotic (SYM), CF Industries (CF), Franklin Resources (BEN), Loews (L), Lattice (LSCC), SCI (SCI), CNA Financial (CNA), ZoomInfo (ZI), KBR (KBR), Avis (CAR), Brixmor Property (BRX), Apartment (AIRC), Sonoco Products (SON), SoFi Technologies (SOFI), Woodward (WWD), Norwegian Cruise Line (NCLH), Amkor (AMKR), Affiliated Managers (AMG), MSA Safety (MSA), Surgery Partners Inc (SGRY), Rambus (RMBS), Viper Energy Ut (VNOM), Kite Realty (KRG), Transocean (RIG), Air Lease (AL), One Gas Inc (OGS), Flowserve (FLS), Leggett&Platt (LEG), MicroStrategy (MSTR), Instructure Holdings (INST), Sprouts Farmers (SFM), Black Stone Minerals (BSM), Vornado (VNO), Terex (TEX), Otter Tail (OTTR), J & J Snack Foods (JJSF), Axonics Modulation Technologies (AXNX), Forward Air (FWRD), Park Hotels & Resorts (PK), CVR Energy (CVI), CNO Financial (CNO), TransMedics (TMDX), Varonis Systems (VRNS), SJW (SJW), Four Corners Property Trust Inc (FCPT), Ameresco (AMRC), Chegg Inc (CHGG), Kennametal (KMT), Ryerson Holding (RYI), Addus (ADUS), Orthopediatrics (KIDS), Sterling Construction (STRL), MEDIFAST (MED), Alexanders (ALX), CVR Partners LP (UAN), Centerspace (CSR), Community Health Systems (CYH), Piedmont Office (PDM), Si-Bone (SIBN), VSE Corporation (VSEC).

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