The stock market rally fell sharply during the past week, but rebounded to close with solid gains, a shakeout that could set the stage for a stronger advance. JPMorgan Chase and PNC Financial are vying to buy First Republic Bank (FRC) after an FDIC takeover as soon as this weekend.
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Dow Jones futures will open on Sunday evening, along with S&P 500 futures and Nasdaq futures.
The major indexes tumbled on Tuesday as First Republic Bank revived banking fears. But the major indexes found support and rebounded. Initially, megacaps such as Meta Platforms (META) and Microsoft (MSFT) led the comeback, but breadth improved late in the week, especially Friday.
The market rally is looking healthier, but remains “under pressure.” Investors still need to see a little more market strength and a lot more buying opportunities.
Earnings season remains heavy this coming week, with Advanced Micro Devices (AMD) out late Tuesday and Apple (AAPL) due on Thursday. Another Fed rate hike is on tap Wednesday, along with major economic data in the coming week. A big question is whether Fed chief Jerome Powell signals that the central bank will pause rate hikes.
FDIC Seen Taking Over First Republic
Banking giants including JPMorgan Chase (JPM) and PNC Financial Services (PNC) are looking to buy First Republic following a government seizure, The Wall Street Journal reported Friday night, citing sources. The FDIC has asked for final bids by Sunday, Bloomberg reported Saturday, after gauging initial interest earlier in the week.
Due to its size, JPMorgan would need a regulatory waiver to buy First Republic.
Bank of America (BAC) is among banks mulling a First Republic bid, CNBC reported Saturday.
An FDIC takeover and sale of First Republic Bank could come this weekend.
FRC stock had plunged 34% in heavy after-hours trading Friday, on reports that the FDIC would take the California-based bank under receivership.
First Republic stock already crashed 75% during the week to fresh record lows, fueled by a massive Q1 deposit outflow. Despite efforts to engineer a quasi-rescue by big banks, expectations of an FDIC takeover grew during the week.
An FDIC takeover almost certainly would protect all First Republic Bank deposits. But FRC stock investors might end up with nothing.
While regional banks tumbled Tuesday, they pared weekly losses significantly. First Republic’s deposit exodus was in a class of its own.
Federal Reserve data Friday evening showed bank deposits and loans both rose in the latest week, signaling no credit crunch so far.
A swift resolution of First Republic situation could restore confidence in the banking sector and buoy market sentiment — if there are no more shoes to drop.
Amazon Leads 5 S&P 500 Stocks Near Buy Points After Earnings
Monday Earnings, Sales
Meanwhile, EV-focused chipmaker On Semiconductor (ON) will report before Monday’s open. ON stock fell solidly this past week along with other EV-exposed chipmakers amid concerns about EV demand.
China EV startups Li Auto (LI), Nio (NIO) and XPeng (XPEV) will report April deliveries early Monday. Weekly data show strong sales for Li Auto, while Nio and Xpeng struggle.
China EV and battery giant BYD (BYDDF) will release April sales data early in the week. The Tesla (TSLA) rival reported strong Q1 earnings on Thursday.
Tesla doesn’t break out China sales, but weekly data so far show a solid start to local sales there. Over the weekend, Tesla began offering some new modest discounts on some Model 3 and Y inventory vehicles in the U.S. and Europe.
BYD stock is in range from an early entry. LI stock is trying to regain key levels. XPeng and Nio stock face significant hurdles. Tesla stock is below all its moving averages.
Also, Arista Networks (ANET) is on tap to report first-quarter earnings Monday night. ANET stock, a big supplier for Meta Platforms and Microsoft, found support at its 50-day line this past week.
META stock is on IBD Leaderboard, with DXCM stock an earnings options play. MSFT stock is on IBD Long-Term Leaders. ANET stock is on the IBD 50. AMD, Arista Networks and DXCM stock are on the IBD Big Cap 20. Arista Networks was Friday’s IBD Stock Of The Day
The video embedded in the article discussed a big market week and analyzed AMD stock, InMode (INMD) and Dexcom.
Dow Jones Futures Today
Dow Jones futures open at 6 p.m. ET on Sunday, along with S&P 500 futures and Nasdaq 100 futures.
Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live
Stock Market Rally
The stock market rally looked ugly on Tuesday but bounced back for gains on the major indexes.
The Dow Jones…
Read More: Market Rally Shakeout May Be Bullish Signal; JPMorgan Eyes First Republic After