The Dow Jones Industrial Average rose Monday, as markets reacted to the third U.S. bank failure of the year. JPMorgan Chase (JPM) agreed to acquire the bulk of First Republic Bank (FRC), marking the second-largest bank failure in U.S. history. FRC stock crashed 45% in morning trade.
Early Monday, Federal regulators seized First Republic and quickly struck a deal to sell the bulk of its operations to JPMorgan. JPMorgan said it will take over all of First Republic’s $92 billion in deposits. It is also buying most of the bank’s assets, including about $173 billion in loans and $30 billion in securities. Dow Jones stock JPMorgan jumped 3.8% in morning trade.
Another focal point this week is the two-day Federal Reserve meeting, which will wrap up with a policy decision Wednesday afternoon. As of Monday morning, markets overwhelmingly expect a hike in the coming week and see odds of another in June at just below 30%, according to the CME FedWatch Tool.
If the Fed opts to forgo a rate hike on Wednesday, amid bank fragility and indications that the economy and job market are softening, markets likely will celebrate — at least briefly. A hike and announcement of a pause on further hikes also could generate a relief rally. The third option, hiking and keeping an additional June hike on the table, likely wouldn’t go down well with Wall Street.
The Institute for Supply Management manufacturing activity index, which has been showing a moderate contraction, is due Monday at 10 a.m. The ISM services index, still in positive territory, is scheduled for Wednesday at 10 a.m.
Finally, Friday’s April jobs report will wrap up the week. Economists expect hiring to slow but remain solid, with employers adding 175,000 jobs and the jobless rate ticking up to 3.6%.
Earnings Movers: Global Payments, ON Semiconductor
Later this week, Advanced Micro Devices (AMD), Arista Networks (ANET), Apple (AAPL), Ford Motor (F), Lattice Semiconductor (LSCC), NXP Semiconductor (NXPI) and Pfizer (PFE) are among those reporting their earnings results.
Stock Market Today
InMode (INMD), IBD Leaderboard stock Las Vegas Sands (LVS), Arista Networks and Paccar (PCAR) — as well as Dow Jones stocks JPMorgan Chase (JPM), Nike (NKE) and Visa (V) — are among the top stocks to watch in the now-struggling stock market.
Dow Jones Today: Oil Prices, Treasury Yields
After Monday’s opening bell, the Dow Jones Industrial Average rose 0.25%, and the S&P 500 moved up 0.2%. The tech-heavy Nasdaq composite dropped 0.1% in morning action. Check Point Software Technologies (CHKP) fell hardest among Nasdaq 100 stocks.
The 10-year U.S. Treasury yield on Monday traded up to 3.48%. Last week, the 10-year Treasury yield snapped a two-week win streak. It remains solidly off its early-April lows.
U.S. oil prices declined sharply Monday morning, on pace to continue a two-week decline. West Texas Intermediate futures held just above $75 a barrel, after pulling back from an April 12 high above $83 a barrel.
Stock Market Rally Struggles
The Dow Jones Industrial Average and the S&P 500 both rallied 0.8% Friday. The tech-heavy Nasdaq composite gained 0.7%, nearing its 2023 highs.
Friday’s Big Picture column commented, “The stock market ended the day, week and April on a high as stocks were lifted by encouraging Big Tech earnings. But with the latest Federal Reserve meeting next week, the question now is whether Fed Chair Powell will rain on the bulls’ parade.”
Now is an important time to read IBD’s The Big Picture column with the stock market still struggling to maintain its uptrend.
Dow Jones Stocks To Buy And Watch: JPMorgan, Nike, Visa
JPMorgan shares rose 0.9% Friday, closing just 2% away from a cup-with-handle buy point at 141.88, according to IBD MarketSmith pattern recognition. JPM stock jumped 3.3%, breaking out above the buy point early Monday.
Nike shares gained another 0.8% Friday, within striking distance of a cup-with-handle’s 127.59 buy point. NKE stock moved up 0.3% in early trade.
Visa shares decisively regained their 230.15 cup-with-handle buy point, as they ascended 1.6% Friday. And V stock edged lower in morning trades.
Best Stocks To Buy And Watch: InMode, Paccar
InMode finished Friday just shy of a cup-with-handle’s 38.48 buy point, with a 1.8% climb, according to IBD MarketSmith. INMD stock fell 1% Monday morning.
Backstory: The company makes noninvasive platforms that tighten skin and obliterate fat cells. It’s also moving into the women’s health realm with gynecological offerings. UBS analyst Danielle Antalffy says InMode provides a lower-cost alternative to traditional plastic surgery.
Paccar is trying to find support around its 50-day line, as it continues to build a flat base with a 76.82 buy point. An early entry at 75.83 is also in play. PCAR stock was up 0.1% Monday.
Backstory: The producer of heavy-duty semi-trucks topped first-quarter estimates Tuesday, reporting a 96% earnings spike. At CES 2022, Paccar exhibited connected and autonomous trucks. The company behind the Kenworth, Peterbilt and DAF nameplates showcased three vehicles.
Arista Networks, Las Vegas Sands
Arista Networks is building a flat base with a 171.54 buy point, as it tries to find support around its 50-day line. Earnings are due out late Monday. Shares were up nearly 1% Monday morning.
Backstory: Santa Clara, Calif.-based Arista sells computer network switches that speed up communications among racks of computer servers packed into “hyperscale” data centers. These internet data centers are designed to ratchet up computing horsepower when demand surges.
IBD Leaderboard stock Las Vegas Sands moved out of 5% buy range above a 60.40 buy point in a cup with handle amid Friday’s 2.6% rally. The buy zone topped out at 63.42. LVS stock was up 2% Monday morning, as Macau’s April gaming revenue surged 450% to hit a three-year high.
Backstory: Last week, Las Vegas Sands smashed earnings expectations for the first quarter and signaled a “robust recovery” in China’s Macau gaming hub. The casino stock posted earnings of 28 cents per share, up from a loss of 40 cents a year ago. Revenue vaulted nearly 125% to $2.12 billion.
Best Stocks To Buy And Watch In Stock Market Rally
These are four best stocks to buy and watch in today’s stock market, including three Dow Jones leaders.
|Company Name||Symbol||Correct Buy Point||Type Of Buy Point|
|InMode||(INMD)||38.48||Cup with handle|
|Nike||(NKE)||127.59||Cup with handle|
|Visa||(V)||230.15||Cup with handle|
|JPMorgan||(JPM)||141.88||Cup with handle|
Source: IBD Data As Of May 1, 2023
Tesla stock bounced another 2.6%, rising sharply for a second straight day. Still, shares remain near their lowest level since late January. In recent weeks, shares triggered the 7%-8% loss rule from a buy point at 200.76 in a cup with handle. And they are trading sharply below their 50-day line. The stock closed Friday 48% off its 52-week high.
TSLA stock threatened to give up a part of Friday’s gains, trading down 1.1% early Monday.
Dow Jones Leaders: Apple, Microsoft
Among Dow Jones stocks, Apple shares rallied 0.75% Friday, closing at their highest level since late August. They remain squarely above a 157.48 buy point and out of the buy range that ran up to 165.35. AAPL stock fell inched higher early Monday. Apple reports its fiscal second-quarter results on Thursday.
Microsoft shares added another 0.8% Friday, extending a win streak to three sessions. Shares are out of buy range past a flat base’s 276.86 buy point. The 5% buy area went up to 290.70. On Monday morning, MSFT stock rose 0.3%.
Be sure to follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on growth stocks and the Dow Jones Industrial Average.
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