US STOCKS-Futures muted as Fed caution sets in, JPMorgan to buy First Republic

Citizens Financial Services

01/05/2023 13:30

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      JPMorgan up after it buys First Republic assets
    

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      Manufacturing activity data due after opening bell
    

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      Fed expected to raise rates later this week 
    

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      Futures off: Dow 0.04%, S&P 0.09%, Nasdaq 0.10% 
    

  
 (Updates prices, adds details)
       May 1 (Reuters) - U.S. stock index futures were muted on
Monday as investors refrained from taking big bets ahead of the
Federal Reserve's policy decision this week, while regulators
said JPMorgan will buy most of the beleaguered First Republic
Bank's assets.
    JPMorgan Chase & Co's shares rose 3.7% in premarket trading
after the deal was announced early on Monday, while First
Republic's stock slumped almost 46% to $1.9 before trading in it
was suspended.
    Shares of First Republic's regional peers PNC Financial
 PNC.N  and Citizens Financial  CFG.N  slipped 2.3% and 1.4%,
respectively, while other big banks including Bank of America
 BAC.N  edged higher.
    The rescue comes less than two months after a deposit flight
from U.S. lenders Silicon Valley Bank and Signature Bank forced
the Fed to step in with emergency measures to stabilize markets.
        First Republic's woes kicked off last week on a bleak
note, but upbeat earnings from Alphabet Inc  GOOGL.O , Microsoft
Corp  MSFT.O  and Meta Platforms Inc  META.O  helped the
benchmark S&P 500  .SPX  notch its second consecutive month of
gain on Friday.
    Analysts now expect first-quarter earnings for S&P 500
companies to fall 1.9% from a year earlier, compared with a 5.1%
fall expected at the start of April, according to Refinitiv
data. Apple Inc  AAPL.O  is set to report later this week.
        Investors are keenly awaiting the conclusion of the
Fed's two-day policy meeting on Wednesday for signs that its
aggressive monetary policy tightening is coming to an end soon.
        Recent economic data has reinforced bets of another
25-basis point interest rate hike, with investors pricing in 90%
chances of such a move, according to CME Group's FedWatch tool.
        Investors will also focus on Jerome Powell's press
conference to assess if the 
    Fed's commentary pushes back
     market expectations of rate cuts before the year-end amid
the recent banking turmoil and threats of an imminent recession.
  
    "While the market has priced in another hike this week, we
think the developments over the weekend will cause the FOMC to
be more prudent with their guidance and respect the message of
the market," said Thomas Hayes, chairman and managing member at
Great Hill Capital.
    "We would not be surprised to see a "pause" after this final
hike. Markets should take today's news in stride knowing that
the repeated bank failures should now have the Fed back on its
heels and defanged moving forward."
    At 7:50 a.m. ET, Dow e-minis  1YMcv1  were down 14 points,
or 0.04%, S&P 500 e-minis  EScv1  were down 3.75 points, or
0.09%, and Nasdaq 100 e-minis  NQcv1  were down 13.5 points, or
0.1%.
    Manufacturing data from the Institute for Supply Management
and S&P Global for April and the Commerce Department's
construction spending for March will be released later in the
day, offering investors more clues on the state of the economy.
    Among earnings-driven moves, Norwegian Cruise Line Holdings
 NCLH.N  rose 2.7% after the cruise operator raised its
full-year profit forecast, betting on higher pricing and pent-up
demand from wealthy customers.
    ON Semiconductor Corp  ON.O , MGM Resorts International
 MGM.N  and Franklin Resources Inc  BEN.N  are some of the major
companies reporting quarterly results before the opening bell.

 (Reporting by Ankika Biswas and Sruthi Shankar in Bengaluru,
Additional reporting by Manya Saini; Editing by Shounak Dasgupta
and Saumyadeb Chakrabarty)
 ((Ankika.Biswas@thomsonreuters.com))