The Dow Jones’ Volatile Ride: SVB Rescue Plan Sparks Market Reversal, First Republic and Charles Schwab Plunge on Bank Fears

On Monday, the Dow Jones Industrial Average reversed higher amid the ongoing crisis among U.S. banks. The FDIC and other financial regulators guaranteed all deposits of SVB Financial (SIVB), while regulators took control of Signature Bank (SBNY). However, San Francisco’s First Republic (FRC) crashed 77% in morning trade despite receiving additional funding from the Federal Reserve and JPMorgan (JPM). Charles Schwab (SCHW) also plunged 20% amid ongoing banking fears.

Dow Jones
Dow Jones

On the economic front, investors were keeping an eye on the consumer price index (CPI) which was expected to rise 0.4%, bringing the headline CPI inflation rate down to 6% from 6.1% in January, with the core inflation rate easing to 5.5% from 5.6%.

Earnings continued to trickle out at the tail end of the season, with Academy Sports & Outdoors (ASO), Adobe (ADBE), Dollar General (DG), FedEx (FDX), Five Below (FIVE), GitLab (GTLB), and Lennar (LEN) among the companies reporting.

Pfizer (PFE) agreed to pay $43 billion for biotech Seagen (SGEN), while genetic screening tools leader Illumina (ILMN) jumped more than 11% early following news reports that activist investor Carl Icahn planned to nominate three persons to the company’s board of directors. However, electric-vehicle leader Tesla (TSLA) traded down more than 2% after Wolfe Research downgraded the stock to peer performance from outperform.

The Dow Jones Industrial Average rose 0.15%, the S&P 500 was down 0.1%, and the tech-heavy Nasdaq composite rose 0.4% in morning action, with Seagen and Illumina leading the index. The 10-year U.S. Treasury yield tumbled to 3.69% on Friday, then dived to 3.47% in early morning trade on Monday as safe-haven trade drove bonds sharply higher following the SVB collapse.

On Friday, the stock market sold off sharply, with the Dow Jones Industrial Average dropping 1.1%, the S&P 500 declining 1.45%, and the tech-heavy Nasdaq tumbling 1.8%. IBD changed its market outlook to “uptrend under pressure” Thursday and after Friday’s selloff, the outlook has been further cut to “market in correction.” Investors are advised to avoid any stock purchases and pivot to defensive trading, such as taking profits and cutting losses short.

Dow Jones leader Salesforce showed big upside strength after strong fourth-quarter results. CRM stock rose 0.5% Monday, but the gains have mostly disappeared amid the recent market weakness, with the stock back below a 178.94 cup-with-handle entry. Nonetheless, the stock’s recent strength is a reason to monitor the software leader in the coming sessions.

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