- S&P 500 gained 0.16% on Monday amidst low volume.
- First Citizens Bank buys about 40% of Silicon Valley Bank assets.
- US Q4 GDP data arrives on Thursday, March 30.
The S&P 500 on Monday moved ahead cautiously without much fanfare after the US government agreed to sell $72 billion worth of Silicon Valley Bank assets to First Citizens Bank (FCNCA). The sale came at a steep discount, but the market took it as a positive sign that bank instability in March will not bleed into April. Low trading volume seems to be the main symptom of this environment, but traders did engage with regional bank shares, which as a group rallied on Monday. Thursday's Q4 GDP announcement is the biggest economic indicator event this week, and the market is largely still pricing in an end to Fed interest rate increases.
At the time of writing, NASDAQ 100 futures are down by 0.25%, while Dow and S&P 500 (SPX) futures are off ever so slightly.
S&P 500 news: Volume light as banking worries ebb
Monday's S&P 500 volume of $2.46 billion was well under the average volume of $4.39 billion, and this pullback in trading activity could be seen across the market. The New York Stock Exchange (Tape A) saw volume 18% below the normal level over the past month.
This is likely just a feature of the reticence that entered markets in March after Silicon Valley and Signature Banks failed and Credit Suisse was rescued by UBS. Deutsche Bank (DB) and First Republic (FRC) remain in limbo, but both stocks experienced rallies in Monday's market. First Republic and other regional banks are benfitting from news over the weekend that the US government is considering extending its lending facility for a longer period of time while banks shore up their balance sheets.
Also over the weekend, the Federal Deposit Insurance Corporation (FDIC) sold $72 billion worth of Silicon Valley's assets to First Citizens Bank. The latter regional bank saw its shares rise nearly 54% on Monday, seeing as it was given a 23% discount, or $16.5 billion, on the deal's market value. Many view this deal as the end to the banking scare, but the FDIC has about $90 billion worth of assets still in receivership.
GDP data arrives on Thursday
Also of note is the US Bureau of Economic Research's Q4 GDP release. The market expects the data to show 2.7% annualized growth as it did during the second estimate in February. Thursday's release will be the third and final estimate for the fourth quarter of 2022.
"The increase in the fourth quarter primarily reflected increases in inventory investment and consumer spending that were partly offset by a decrease in housing investment," the BEA wrote back in February. Q3 2022 was estimated at 3.2%, so the data released so far suggest that the US economy is slowing. This is likely caused by the Fed's interest rate increases.
Earnings of the week
Tuesday, March 28 - Lululemon (LULU), McCormick (MKC), Walgreens Boots Alliance (WBA), Micron (MU)
Wednesday, March 29 - RH (RH), Cintas (CTAS), Paychex (PAYX)
Thursday, March 30 - EVgo (EVGO)
S&P 500 quote
Mike Wilson, chief equity strategist and CIO at Morgan Stanley, spoke on Bloomberg's Surveillance podcast on March 27 about his view that coming low earnings guidance is likely to compress stock multiples:
“Everyone focuses on the S&P 500 or the NASDAQ 100 as if they are these bastions of safety, and they are until they're not."
S&P 500 technical analysis
The S&P 500 is still under 4,000, but Monday's optimism points to a break soon enough. The weekly chart below gives us the lay of the land. The S&P 500 has been in a downtrend since February 2, but the most recent bottom was achieved on March 13. Since then the S&P 500 has been rising in the second half of March. As traders evacuated bank stocks during the month, they began a rally in tech and semiconductor stocks that has held up the index.
To keep the uptrend going for more than two weeks, the S&P 500 needs to close above the 9-week moving average, currently at 4,005. From there if investors keep putting capital back in play, the index could rise to the immediate bullish target in the resistance zone ranging from 4,100 to 4,200. That range has been one of the most significant for chart traders going back to February 2022. Support remains at 3,800.
S&P 500 weekly chart
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD closes in on 1.0700 amid broad USD strength

EUR/USD came under renewed bearish pressure in the American session and dropped to its lowest level since late March near 1.0700. Stronger-than-forecast PCE inflation data and hawkish comments from Fed's Mester provide a boost to the US Dollar and weigh on the pair.
GBP/USD loses bullish momentum after US data, falls below 1.2350

GBP/USD has reversed its direction and erased a large portion of its daily gains on Friday after the data from the US showed that the annual core PCE inflation edged higher to 4.7% in April. Although the pair clings to small daily gains below 1.2350, it remains on track to end the third straight week in negative territory.
Gold erases daily gains, holds above $1,940

Gold price turned south and declined to the $1,940 area in the American session on Friday. The benchmark 10-year US Treasury bond yield holds stead above 3.8% after stronger-than-expected core PCE inflation data from the US, not allowing XAU/USD to gain traction.
Ethereum price to outpace Bitcoin price as ETH jumps over key hurdle where BTC fumbles

ETH is working on its recovery after it dipped to a two-week low on Thursday. While Bitcoin price has failed to make a similar move and head back above $26,500, Ethereum is outpacing Bitcoin and has been able to push above $1,800.
Ford Stock: New agreement will give customers access to 12,000 Tesla chargers

Ford (F) stock has advanced about 2.5% early Friday following CEO Chris Farley’s announcement that Ford owners will be able to charge their EVs at Tesla Superchargers beginning in early 2024.