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‘March returns in May,’ says Goldman Sachs
Goldman Sachs says investors haven’t fully moved past March’s bank crisis as banking stocks trade lower on Tuesday. The firm’s analysts noted that following the failures of Silicon Valley Bank and Signature Bank in March, the market’s worries were quickly alleviated by a deposit injection at First Republic Bank.
“Since bottoming out at 3808 on Mar. 13, the S&P 5000 gained almost 10% [as of] Monday night on the back of relaxed banks tensions, as well as a strong earnings season (so far) and a growing consensus that the Fed will soon pause its year-long rate hiking cycle,” several Goldman analysts wrote in a Tuesday note.
“But today, we appear to be seeing some return of the March concerns following JPM’s announced acquisition of FRC Monday. Regional bank stocks are down 4% to 13%. [Managing director Richard] Ramsden sees the JPM acquisition as accretive and points out that the transaction highlights that G-SIBs will be allowed to bid on FDIC transactions even if they are above the deposit cap,” the note continued.
— Hakyung Kim
Former Fed official Rosengren advocates no rate hike
Eric Rosengren thinks his former colleagues at the Federal Reserve will be making a mistake if they raise interest rates again Wednesday.
The former Boston Fed president, who retired from the board in September 2021, told CNBC on Tuesday that turmoil in the banking industry and an economic slowdown should push policymakers to end the rate-hiking campaign that began in March 2022.
“My own view is that the economy is quite likely to slow down in the second half of the year and that it’s not necessary at this point to be raising rates until we get a better view of what the second half of the year looks like,” Rosengren said on “Squawk Box.”
Traders in the futures market are pricing in a 96% chance that the Federal Open Market Committee approves a quarter percentage point rate hike when the two-day meeting ends, according to the CME Group’s FedWatch tracker.
—Jeff Cox
WTI Crude Oil settles at lowest levels since March
WTI Crude settled down 5.29% at $71.66, marking its lowest settle since Mar. 24, when it settled at $69.26. WTI Crude has declined 10.7% in 2023.
Brent crude and natural gas also settled lower, falling 5.03% and 4.49%, respectively. Brent crude has shed 12.33% year to date, closing at $75.32 on Tuesday. Meanwhile, natural gas has tumbled more than 50% in 2023.
— Hakyung Kim
Oil prices drop on China factory data, economic outlook
Oil prices fell sharply Tuesday following an unexpected contraction in Chinese factory activity, reported Sunday, and ahead of further interest rate hikes expected from the Federal Reserve and European Central Bank this week.
Brent crude futures dropped 4.3% to $75.87 at 10:53 a.m. ET, while West Texas Intermediate crude futures were down 4.4% to $72.34 — their lowest levels since late March.
The drops came despite news that OPEC oil output fell in April, according to a Reuters survey.
ICE Brent Crude
Job openings declined more than expected in March
Employment openings hit a nearly two-year low in March, a sign the jobs market is loosening up, the Labor Department reported Tuesday.
Openings totaled 9.59 million, the lowest since April 2021 and below the FactSet estimate of 9.64 million, according to the Job Openings and Labor Turnover Survey.
The Federal Reserve watches the JOLTS report closely for signs of labor slack. Declining job openings is a positive for inflation as it helps put less pressure on wage increases.
The full story can be found here.
—Jeff Cox
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